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Factors That Could Impact Western Digital Stock in 2017

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Jun. 19 2017, Updated 9:08 a.m. ET

Stock has risen 28.5% in 2017

Western Digital (WDC) stock has increased almost 30% since the start of 2017 and closed at $87.31 on June 15, 2017. WDC is one the largest global players in the storage space. 

WDC stock rose 16% in January 2017 after the company announced its fiscal 2Q17[1. fiscal 2Q17 ended December 30, 2016] results. WDC stock has risen 2% since its fiscal 3Q17[2. fiscal 3Q17 ended March 31, 2017] results were announced in April 2017.

In fiscal 3Q17, Western Digital (WDC) reported revenues of $4.6 billion with non-GAAP[1. generally accepted accounting principles] EPS (earnings per share) of $2.39. WDC has consistently reported good quarterly results since it closed the SanDisk acquisition. 

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During the fiscal 3Q17 earnings call on April 27, 2017, Western Digital’s CEO, Steve Milligan, stated, “With three consecutive quarters of strong financial results following the completion of the SanDisk acquisition, we are seeing continued validation of our growth strategy and our ongoing transformation into a comprehensive provider of diversified storage products and technologies.”

Broad portfolio of products

Driven by a broad portfolio of products, Western Digital (WDC) is a market leader in the storage industry. Strong demand for storage and exponential growth of data have enabled WDC to post YoY (year-over-year) growth in revenues, beating analyst estimates.

In fiscal 3Q17, analysts expected WDC to post revenues of $4.6 billion with EPS of $2.13. Although the company met its revenue estimate, it beat its EPS estimate by 12.2% in fiscal 3Q17. Its revenues rose more than 60% YoY due to the SanDisk acquisition. WDC also beat analysts’ consensus EPS estimate by 8.5% in fiscal 2Q17 when it announced its EPS of $2.30.

Western Digital has a market cap of $25 billion. Among its peers in the storage industry, Seagate (STX), IBM (IBM), NetApp (NTAP), and Pure Storage (PSTG) have market caps of $12.0 billion, $145.0 billion, $10.0 billion, and $2.8 billion, respectively.

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