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5 Reasons to Add Western Digital (WDC) to Your Portfolio
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Western Digital Corp. (WDC - Free Report) appears a promising pick at the moment driven by stellar second-quarter 2018 results, strong product portfolio strength and expanding partner base. Moreover, it has been a favorite with investors, courtesy of its rising share price and strong fundamentals.
The companyhas been witnessing upward estimate revisions, reflecting analysts’ optimism. The stock has seen the Zacks Consensus Estimate for current-year earnings being revised 1.1% upward, over the last 60 days. Consequently, the stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Itsshares have returned 12.2% over the three months, substantially outperforming the 0.6% rally of the industry.
Notably, the companyhas a number of other aspects that make it an lucrative investment option.
5 Reasons Why Western Digitalis an Attractive Pick
Upbeat Q2 Results: Western Digital delivered second-quarter fiscal 2018 non-GAAP earnings of $3.95 per share, which beat the Zacks Consensus Estimate by 14 cents and soared 71.7% from the year-ago quarter.
Revenues also increased 9.2% year over year to $5.34 billion and surpassed the Zacks Consensus Estimate of $5.29 billion. The strong top-line growth reflected healthy demand in the company’s end-markets for high capacity enterprise hard drives and flash-based products.
Stock Looks Undervalued: From a valuation perspective, the stock looks very attractive as it currently trades significantly lower than the industry average based on a forward earnings estimate, which signifies a huge upward potential. Western Digitalcurrently trades at a forward P/E of 6.61x compared with the industry group average of 7.50x.
Positive Earnings Surprise History: Western Digitalhas an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, recording a positive average earnings surprise of 6.4%.
Strong Hold in SSD storage market: Western Digital has been expanding into the SSD storage market due to the decline in the PC market. SSDs are faster and more energy efficient than traditional hard drives. The secular growth of digital data, modest improvement in the TAM and higher demand for storage will remain the catalysts for storage in general and especially for SSDs. This persuaded TechNavio to project enterprise SSD market to grow at a CAGR of 17% during 2016-2020. The SSD segment’s growth potential is a major positive for Western Digital because this could mitigate the losses stemming from the secular decline in the PC market, which does not necessarily use SSDs.
Active on the Acquisition Front: The acquisition of SanDisk has opened new avenues of growth for Western Digital and will help it boost market traction in the newer storage technology — SSD. The merger will lead to economies of scale, lower costs, greater market reach and acquisitions of new technologies, among other synergies.
The Amplidata, sTec, Inc., Velobit, Inc. Arkeia Software Solutions and Virident Systems Inc. acquisitions have not only strengthened its small-to-medium sized business solutions but also expanded its SSD product portfolio. Moreover, the company’s strong cash balance of $6.27 billion and positive operating cash flow of $1.18 billion at the end of second-quarter fiscal 2018 enabled it to expand through acquisitions. These strategic takeovers are expected to provide the company with a competitive edge.
Other Key Picks
Some other top-ranked stocks in the broader technology sector include Applied Materials, Inc. (AMAT - Free Report) , NVIDIA Corporation (NVDA - Free Report) and Seagate Technology PLC (STX - Free Report) , all sporting a Zacks Rank #1.
Applied Materials, NVIDIA and Seagate Technology have a long-term expected EPS growth rate of 13.26%, 10.25% and 15.6%, respectively.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Image: Bigstock
5 Reasons to Add Western Digital (WDC) to Your Portfolio
Western Digital Corp. (WDC - Free Report) appears a promising pick at the moment driven by stellar second-quarter 2018 results, strong product portfolio strength and expanding partner base. Moreover, it has been a favorite with investors, courtesy of its rising share price and strong fundamentals.
The companyhas been witnessing upward estimate revisions, reflecting analysts’ optimism. The stock has seen the Zacks Consensus Estimate for current-year earnings being revised 1.1% upward, over the last 60 days. Consequently, the stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Itsshares have returned 12.2% over the three months, substantially outperforming the 0.6% rally of the industry.
Notably, the companyhas a number of other aspects that make it an lucrative investment option.
5 Reasons Why Western Digitalis an Attractive Pick
Upbeat Q2 Results: Western Digital delivered second-quarter fiscal 2018 non-GAAP earnings of $3.95 per share, which beat the Zacks Consensus Estimate by 14 cents and soared 71.7% from the year-ago quarter.
Revenues also increased 9.2% year over year to $5.34 billion and surpassed the Zacks Consensus Estimate of $5.29 billion. The strong top-line growth reflected healthy demand in the company’s end-markets for high capacity enterprise hard drives and flash-based products.
Stock Looks Undervalued: From a valuation perspective, the stock looks very attractive as it currently trades significantly lower than the industry average based on a forward earnings estimate, which signifies a huge upward potential. Western Digitalcurrently trades at a forward P/E of 6.61x compared with the industry group average of 7.50x.
Positive Earnings Surprise History: Western Digitalhas an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, recording a positive average earnings surprise of 6.4%.
Strong Hold in SSD storage market: Western Digital has been expanding into the SSD storage market due to the decline in the PC market. SSDs are faster and more energy efficient than traditional hard drives. The secular growth of digital data, modest improvement in the TAM and higher demand for storage will remain the catalysts for storage in general and especially for SSDs. This persuaded TechNavio to project enterprise SSD market to grow at a CAGR of 17% during 2016-2020. The SSD segment’s growth potential is a major positive for Western Digital because this could mitigate the losses stemming from the secular decline in the PC market, which does not necessarily use SSDs.
Active on the Acquisition Front: The acquisition of SanDisk has opened new avenues of growth for Western Digital and will help it boost market traction in the newer storage technology — SSD. The merger will lead to economies of scale, lower costs, greater market reach and acquisitions of new technologies, among other synergies.
The Amplidata, sTec, Inc., Velobit, Inc. Arkeia Software Solutions and Virident Systems Inc. acquisitions have not only strengthened its small-to-medium sized business solutions but also expanded its SSD product portfolio. Moreover, the company’s strong cash balance of $6.27 billion and positive operating cash flow of $1.18 billion at the end of second-quarter fiscal 2018 enabled it to expand through acquisitions. These strategic takeovers are expected to provide the company with a competitive edge.
Other Key Picks
Some other top-ranked stocks in the broader technology sector include Applied Materials, Inc. (AMAT - Free Report) , NVIDIA Corporation (NVDA - Free Report) and Seagate Technology PLC (STX - Free Report) , all sporting a Zacks Rank #1.
Applied Materials, NVIDIA and Seagate Technology have a long-term expected EPS growth rate of 13.26%, 10.25% and 15.6%, respectively.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Download the new report now>>