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Why Is Western Digital (WDC) Up 4.1% Since Last Earnings Report?
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It has been about a month since the last earnings report for Western Digital (WDC - Free Report) . Shares have added about 4.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Western Digital due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Western Digital Q4 Earnings Beat Estimates
Western Digital reported fourth-quarter fiscal 2024 non-GAAP earnings of $1.44 per share, surpassing the Zacks Consensus Estimate by 14.3%. The company reported a loss of $1.99 per share in the prior-year quarter.
For fiscal 2024, the company reported a net loss of 20 cents per share, down 94% year over year.
The company's diverse and innovative portfolio aligns well with its strategic roadmap, and the structural change implementations have strengthened operational efficiency highlighted Western Digital.
Revenues of $3.76 billion missed the Zacks Consensus Estimate by 0.18%. However, the top line soared 41% year over year owing to robust performance across Cloud end markets. On a sequential basis, revenues increased 9%.
For fiscal 2024, revenues rose 6% year over year to $13 billion.
Quarter in Detail
Revenues from the Cloud end market (50% of total revenues) climbed 89% year over year to $1,882 million, driven by rising shipments and price per unit for nearline HDDs, combined with higher enterprise SSD bit shipments. The cloud segment saw sequential growth of 21% attributed to higher nearline HDD shipments and improved pricing, as well as increased bit shipments and pricing for enterprise SSDs.
Revenues from the Client end market (32%) were up 16% year over year to $1,204 million, backed by increasing flash average selling prices (ASPs). Revenues in the client segment grew 3% sequentially due to an uptick in flash ASPs, which offset a decline in flash bit shipments. HDD revenue witnessed a marginal decrease.
Revenues from the Consumer end market (18%) were up 5% year over year to $678 million, driven by heightened flash ASPs and bit shipments. Sequentially, the consumer segment experienced a 7% decrease in revenues due to reduced flash and HDD bit shipments, partially mitigated by higher ASPs in both flash and HDD categories.
Considering revenues by product group, Flash revenues (46.8% of total revenues) rose 28% from the year-ago quarter figure to $1.761 billion. Sequentially, flash revenues grew 3%.
Hard disk drive (HDD) revenues (53.2% of total revenues) surged 55% year over year to $2 billion. Revenues were up 14% quarter over quarter.
Margins
Non-GAAP gross margin was 36.3% compared with 3.9% in the year-ago quarter. The improvement was driven by better pricing and cost discipline, along with an increase in volume.
HDD’s gross margin expanded 15.4% year over year to 36.1%. Flash gross margin came in at 36.5% compared with (11.9%) in the prior-year quarter.
Non-GAAP operating expenses increased 20% year over year to $700 million. Non-GAAP operating income totaled $666 million against a non-GAAP operating loss of $478 million in the prior-year quarter.
Balance Sheet & Cash Flow
As of Jun 28, 2024, cash and cash equivalents were $1.8 billion compared with $2 billion reported as of Jun 30, 2023.
The long-term debt (including the current portion) was $5.684 billion as of Jun 30, 2024.
Western Digital generated $366 million in cash from operations against $68 million of cash utilized in the prior-year quarter.
Free cash flow amounted to $282 million in the quarter under review against the free cash outflow of $219 million reported in the prior-year quarter.
Fiscal Q1 Guidance
For first-quarter fiscal 2025, the company expects non-GAAP revenues in the range of $4-$4.2 billion.
Management projects non-GAAP earnings in the range of $1.55 to $1.85 per share.
It expects non-GAAP gross margin in the range of 37-39%. Non-GAAP operating expenses are expected to be between $695 million and $715 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Western Digital has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Western Digital has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Western Digital (WDC) Up 4.1% Since Last Earnings Report?
It has been about a month since the last earnings report for Western Digital (WDC - Free Report) . Shares have added about 4.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Western Digital due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Western Digital Q4 Earnings Beat Estimates
Western Digital reported fourth-quarter fiscal 2024 non-GAAP earnings of $1.44 per share, surpassing the Zacks Consensus Estimate by 14.3%. The company reported a loss of $1.99 per share in the prior-year quarter.
For fiscal 2024, the company reported a net loss of 20 cents per share, down 94% year over year.
The company's diverse and innovative portfolio aligns well with its strategic roadmap, and the structural change implementations have strengthened operational efficiency highlighted Western Digital.
Revenues of $3.76 billion missed the Zacks Consensus Estimate by 0.18%. However, the top line soared 41% year over year owing to robust performance across Cloud end markets. On a sequential basis, revenues increased 9%.
For fiscal 2024, revenues rose 6% year over year to $13 billion.
Quarter in Detail
Revenues from the Cloud end market (50% of total revenues) climbed 89% year over year to $1,882 million, driven by rising shipments and price per unit for nearline HDDs, combined with higher enterprise SSD bit shipments. The cloud segment saw sequential growth of 21% attributed to higher nearline HDD shipments and improved pricing, as well as increased bit shipments and pricing for enterprise SSDs.
Revenues from the Client end market (32%) were up 16% year over year to $1,204 million, backed by increasing flash average selling prices (ASPs). Revenues in the client segment grew 3% sequentially due to an uptick in flash ASPs, which offset a decline in flash bit shipments. HDD revenue witnessed a marginal decrease.
Revenues from the Consumer end market (18%) were up 5% year over year to $678 million, driven by heightened flash ASPs and bit shipments. Sequentially, the consumer segment experienced a 7% decrease in revenues due to reduced flash and HDD bit shipments, partially mitigated by higher ASPs in both flash and HDD categories.
Considering revenues by product group, Flash revenues (46.8% of total revenues) rose 28% from the year-ago quarter figure to $1.761 billion. Sequentially, flash revenues grew 3%.
Hard disk drive (HDD) revenues (53.2% of total revenues) surged 55% year over year to $2 billion. Revenues were up 14% quarter over quarter.
Margins
Non-GAAP gross margin was 36.3% compared with 3.9% in the year-ago quarter. The improvement was driven by better pricing and cost discipline, along with an increase in volume.
HDD’s gross margin expanded 15.4% year over year to 36.1%. Flash gross margin came in at 36.5% compared with (11.9%) in the prior-year quarter.
Non-GAAP operating expenses increased 20% year over year to $700 million. Non-GAAP operating income totaled $666 million against a non-GAAP operating loss of $478 million in the prior-year quarter.
Balance Sheet & Cash Flow
As of Jun 28, 2024, cash and cash equivalents were $1.8 billion compared with $2 billion reported as of Jun 30, 2023.
The long-term debt (including the current portion) was $5.684 billion as of Jun 30, 2024.
Western Digital generated $366 million in cash from operations against $68 million of cash utilized in the prior-year quarter.
Free cash flow amounted to $282 million in the quarter under review against the free cash outflow of $219 million reported in the prior-year quarter.
Fiscal Q1 Guidance
For first-quarter fiscal 2025, the company expects non-GAAP revenues in the range of $4-$4.2 billion.
Management projects non-GAAP earnings in the range of $1.55 to $1.85 per share.
It expects non-GAAP gross margin in the range of 37-39%. Non-GAAP operating expenses are expected to be between $695 million and $715 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Western Digital has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Western Digital has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.