) hit a new 52-week high of $96.31 on Jun 2, eventually closing at
$95.92. The closing share price represents an extraordinary
one-year return of 51.75% and a year-to-date return of 16.01%.
On an average, Western Digital's earnings have surpassed the
Zacks Consensus Estimate by 5.48% over the last four quarters,
making investors bullish on the stock. Moreover, the company has a
long-term earnings growth expectation of 4.83%.
Western Digital is the largest HDD manufacturer in the U.S. It
is worth noting that IT research firm Gartner expects worldwide HDD
shipments to grow at a compound annual growth rate (CAGR) of 2.9%
from 2013 (552 units) through 2018 (635 units).
Gartner also stated that high-capacity business drives are
expected to grow at a CAGR of 25.1% during the period. Western
Digital's new high-capacity helium drives target this growth
We believe the secular growth of digital data and Western
Digital's growing exposure to the small and medium business space
are the long-term positives. We remain encouraged by the company's
launch of a string of storage devices under the mobile and cloud
Moreover, the company is expected to get good mileage from its
cloud-based business. Cloud-based storage has become the order of
the day as it allows users to access content through different
gadgets such as smartphone, tablets and personal computers.
Another positive is the significant rise in contribution from
the company's non-PC segment, which accounted for 53% of the
revenues in the last reported quarter.
Nonetheless, weaker-than-expected PC shipments are affecting
Western Digital's results. According to IDC's latest report,
shipments are expected to decline 6.1% in 2014. Although the rate
of decline is expected to stabilize from 9.8% registered in 2013
due to the refreshes, the return to growth remains a distant
Moreover, Western Digital's strategic acquisitions to widen its
SSD offerings are expected to position it better with respect to
peers such as
Currently, Western Digital has a Zacks Rank #3 (Hold). Investors
may consider a better-ranked stock like
) sporting a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
WESTERN DIGITAL (WDC): Free Stock Analysis
SEAGATE TECH (STX): Free Stock Analysis Report
SANDISK CORP (SNDK): Free Stock Analysis Report
MICRON TECH (MU): Free Stock Analysis Report
To read this article on Zacks.com click here.