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Western Digital Q1 Earnings Beat on Solid Revenue Growth, Stock Jumps
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Western Digital Corporation (WDC - Free Report) reported first-quarter fiscal 2025 non-GAAP earnings of $1.78 per share, surpassing the Zacks Consensus Estimate by 2.3%. The company incurred a loss of $1.76 per share in the prior-year quarter.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Revenues of $4.1 billion missed the Zacks Consensus Estimate by 0.4%. However, the top line climbed 49% year over year owing to strong demand trends across Cloud end markets. On a sequential basis, revenues increased 9%.
The company’s performance reflects its commitment to operational excellence, strategic capital investment and emphasis on high-growth segments in the storage industry, including cloud storage and enterprise SSDs.
In response to the results, shares of WDC gained 10.9% in the pre-market trading on Oct. 25. In the past year, shares have gained 73.3% compared with the sub-industry’s growth of 63.9%.
Image Source: Zacks Investment Research
Quarter in Detail
Revenues from the Cloud end market (54% of total revenues) skyrocketed 153% year over year to $2,208 million, fueled by rising demand for higher nearline HDD shipments and enterprise SSDs within data centers. The cloud segment grew 17% sequentially.
Revenues from the Client end market (29%) were up 5% year over year to $1,209 million, powered by increasing flash average selling prices (ASPs) as bit shipments fall, offset by a dip in HDD revenues. Revenues in the client segment remained flat sequentially. The demand for flash memory grew within gaming and mobile applications, which was partially offset by a decline in PC OEM demand. In HDDs, revenues remained relatively stable year over year.
Revenues from the Consumer end market (17%) were down 7% year over year to $678 million. The downtick was due to reduced Flash and HDD bit shipments, offset by improved pricing in both Flash and HDD. While it exhibited slight sequential growth in HDD sales, it was dampened by lower demand for flash products. Sequentially, the consumer segment remained flat.
Western Digital Corporation Price, Consensus and EPS Surprise
Considering revenues by product group, Flash revenues (46% of total revenues) rose 21% from the year-ago quarter figure to $1.9 billion. Sequentially, flash revenues grew 7%. Uptrend demand for enterprise SSD products was driven by continued recovery in the datacenter.
Hard disk drive (HDD) revenues (54% of total revenues) surged 85% year over year to $2.2 billion. Revenues were up 10% quarter over quarter. The uptick was driven by higher HDD exabyte shipments owing to healthy growth in the nearline portfolio.
Margins
Non-GAAP gross margin was 38.5% compared with 4.1% in the year-ago quarter. The figure was at the higher end of the company’s guided range, driven by better pricing and cost discipline, along with an improved product mix.
HDD’s gross margin was 38.1%, up from 22.9% in the prior year quarter. Flash gross margin came in at 38.9% against (10.3%) in the prior-year quarter.
Non-GAAP operating expenses increased 24.5% year over year to $691 million. Non-GAAP operating income totaled $884 million against a non-GAAP operating loss of $443 million in the prior-year quarter.
Balance Sheet & Cash Flow
As of Sept. 27, 2024, cash and cash equivalents were $1.71 billion compared with $1.88 billion reported as of June 28, 2024.
The long-term debt (including the current portion) was $7.4 billion as of Sept. 27.
Western Digital generated $34 million in cash from operations against $626 million of cash utilized in the prior-year quarter.
Free cash outflow amounted to $14 million in the quarter under review compared with $544 million reported in the prior-year quarter.
Fiscal Q2 Outlook
The company expects non-GAAP revenues in the range of $4.2-$4.4 billion. The Zacks Consensus Estimate is currently pegged at $4.31 billion.
Management projects non-GAAP earnings in the range of $1.75 to $2.05 per share. The Zacks Consensus Estimate is currently pegged at $2.01.
WDC 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.
WDC’s Zacks Rank
Currently, Western Digital carries a Zacks Rank #5 (Strong Sell).
Iridium (IRDM - Free Report) reported earnings per share (EPS) of 21 cents for the third quarter of 2024, beating the Zacks Consensus Estimate by 5%. The company incurred a loss of 1 cent per share in the prior year quarter.
Shares of IRDM have lost 21.4% in the past year.
Badger Meter, Inc (BMI - Free Report) reported EPS of $1.08 for the third quarter of 2024, beating the Zacks Consensus Estimate by 5.9%. Also, the bottom line compared favorably with the year-ago quarter’s EPS of 88 cents.
Shares of BMI have gained 46.2% in the past year.
America Movil (AMX - Free Report) reported net income per ADR of 11 cents for the third quarter of 2024, up from 4 cents in the prior-year quarter.
Shares of AMX have lost 1.3% in the past year.
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Western Digital Q1 Earnings Beat on Solid Revenue Growth, Stock Jumps
Western Digital Corporation (WDC - Free Report) reported first-quarter fiscal 2025 non-GAAP earnings of $1.78 per share, surpassing the Zacks Consensus Estimate by 2.3%. The company incurred a loss of $1.76 per share in the prior-year quarter.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Revenues of $4.1 billion missed the Zacks Consensus Estimate by 0.4%. However, the top line climbed 49% year over year owing to strong demand trends across Cloud end markets. On a sequential basis, revenues increased 9%.
The company’s performance reflects its commitment to operational excellence, strategic capital investment and emphasis on high-growth segments in the storage industry, including cloud storage and enterprise SSDs.
In response to the results, shares of WDC gained 10.9% in the pre-market trading on Oct. 25. In the past year, shares have gained 73.3% compared with the sub-industry’s growth of 63.9%.
Image Source: Zacks Investment Research
Quarter in Detail
Revenues from the Cloud end market (54% of total revenues) skyrocketed 153% year over year to $2,208 million, fueled by rising demand for higher nearline HDD shipments and enterprise SSDs within data centers. The cloud segment grew 17% sequentially.
Revenues from the Client end market (29%) were up 5% year over year to $1,209 million, powered by increasing flash average selling prices (ASPs) as bit shipments fall, offset by a dip in HDD revenues. Revenues in the client segment remained flat sequentially. The demand for flash memory grew within gaming and mobile applications, which was partially offset by a decline in PC OEM demand. In HDDs, revenues remained relatively stable year over year.
Revenues from the Consumer end market (17%) were down 7% year over year to $678 million. The downtick was due to reduced Flash and HDD bit shipments, offset by improved pricing in both Flash and HDD. While it exhibited slight sequential growth in HDD sales, it was dampened by lower demand for flash products. Sequentially, the consumer segment remained flat.
Western Digital Corporation Price, Consensus and EPS Surprise
Western Digital Corporation price-consensus-eps-surprise-chart | Western Digital Corporation Quote
Considering revenues by product group, Flash revenues (46% of total revenues) rose 21% from the year-ago quarter figure to $1.9 billion. Sequentially, flash revenues grew 7%. Uptrend demand for enterprise SSD products was driven by continued recovery in the datacenter.
Hard disk drive (HDD) revenues (54% of total revenues) surged 85% year over year to $2.2 billion. Revenues were up 10% quarter over quarter. The uptick was driven by higher HDD exabyte shipments owing to healthy growth in the nearline portfolio.
Margins
Non-GAAP gross margin was 38.5% compared with 4.1% in the year-ago quarter. The figure was at the higher end of the company’s guided range, driven by better pricing and cost discipline, along with an improved product mix.
HDD’s gross margin was 38.1%, up from 22.9% in the prior year quarter. Flash gross margin came in at 38.9% against (10.3%) in the prior-year quarter.
Non-GAAP operating expenses increased 24.5% year over year to $691 million. Non-GAAP operating income totaled $884 million against a non-GAAP operating loss of $443 million in the prior-year quarter.
Balance Sheet & Cash Flow
As of Sept. 27, 2024, cash and cash equivalents were $1.71 billion compared with $1.88 billion reported as of June 28, 2024.
The long-term debt (including the current portion) was $7.4 billion as of Sept. 27.
Western Digital generated $34 million in cash from operations against $626 million of cash utilized in the prior-year quarter.
Free cash outflow amounted to $14 million in the quarter under review compared with $544 million reported in the prior-year quarter.
Fiscal Q2 Outlook
The company expects non-GAAP revenues in the range of $4.2-$4.4 billion. The Zacks Consensus Estimate is currently pegged at $4.31 billion.
Management projects non-GAAP earnings in the range of $1.75 to $2.05 per share. The Zacks Consensus Estimate is currently pegged at $2.01.
WDC 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.
WDC’s Zacks Rank
Currently, Western Digital carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks here.
Performance of Other Companies
Iridium (IRDM - Free Report) reported earnings per share (EPS) of 21 cents for the third quarter of 2024, beating the Zacks Consensus Estimate by 5%. The company incurred a loss of 1 cent per share in the prior year quarter.
Shares of IRDM have lost 21.4% in the past year.
Badger Meter, Inc (BMI - Free Report) reported EPS of $1.08 for the third quarter of 2024, beating the Zacks Consensus Estimate by 5.9%. Also, the bottom line compared favorably with the year-ago quarter’s EPS of 88 cents.
Shares of BMI have gained 46.2% in the past year.
America Movil (AMX - Free Report) reported net income per ADR of 11 cents for the third quarter of 2024, up from 4 cents in the prior-year quarter.
Shares of AMX have lost 1.3% in the past year.