We expect storage device manufacturer
Western Digital Corp.
) to beat expectations when it reports second quarter 2013
results on January 23rd.
Why a Likely Positive Surprise?
Our proven model shows that Western Digital is likely to beat
earnings because it has the right combination of two key
Zacks Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
): The Expected Surprise Prediction or ESP, which represents the
difference between the Most Accurate estimate and the Zacks
Consensus Estimate, is +2.75%. This is very meaningful and a
leading indicator of a likely positive earnings surprise for
Zacks Rank #3 (Hold): Note that stocks with Zacks Ranks of #1, #2
and #3 have a significantly higher chance of beating earnings
estimates. The sell-rated stocks (Zacks Rank #4 and #5) should
never be considered going into an earnings announcement.
The combination of Western Digital's Zacks Rank #3 (Buy) and
2.75% positive ESP makes us reasonably confident about looking
for a positive earnings beat on January 23rd.
What is Driving the Better than Expected
Sky-rocketing demand for high capacity storage due to increasing
data exchanges and a more conducive pricing environment are
positive for Western Digital.
October 22, 2012
, the company delivered first quarter earnings per share of
$2.36, beating the Zacks Consensus Estimate by 2.2%. Revenues
grew 49.8% from the year-ago quarter. However, Western Digital
provided a cautious guidance due to continued macro weakness and
a weak PC market.
The company is in constant war with rival
). But Western Digital is confident that with new product
offerings, further cost optimization, strategic allocation of
capital and efficient execution, it can grow market share going
We also believe that the company's strategy to continuously
return shareholder value through share buybacks and dividend
payout will boost the earnings per share.
The positive trend is seen in the trailing four-quarter average
surprise of 22.7%.
Other Stocks to Consider
Western Digital is not the only firm looking up this earnings
season. We also see likely earnings beats coming from these 2
), Earnings ESP of +14.82% and Zacks Rank #1 (Strong Buy).
), Earnings ESP of +0.18% and Zacks Rank #2 (Buy).
WESTERN DIGITAL (WDC): Free Stock Analysis
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