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Western Digital (WDC) to Post Q4 Earnings: What to Expect?

Western Digital WDC is scheduled to report fourth-quarter fiscal 2020 results on Aug 5.

For fourth-quarter fiscal 2020, Western Digital expects revenues in the range of $4.25-$4.45 billion. The Zacks Consensus Estimate for revenues is currently pegged at $4.35 billion, indicating an improvement of 19.6% over the year-ago reported figure.

Moreover, management projects non-GAAP earnings between $1.00 and $1.05 per share.

The consensus mark for earnings is pegged at $1.20 per share compared with the prior-year reported figure of 17 cents. Notably, the estimates have remained stable in the past seven days.

The company’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters while missing the same once. It has a trailing four-quarter negative earnings surprise of 8.33%, on average.

Factors to Note

Improving NAND prices and rise in PC shipments are likely to have benefited Western Digital’s fiscal fourth-quarter performance.

Incremental adoption of latest high-capacity HDD products with robust storage capabilities might have driven the company’s Client Devices revenues amid high PC sales triggered by coronavirus crisis induced work-from-home wave.

Notably, the Zacks Consensus Estimate for Client Devices revenues for the fiscal fourth quarter is currently pegged at $1.93 billion, suggesting growth of 20% from the year-ago reported figure.

Cloud and hyperscale customers have been witnessing solid demand driven by surge in data consumption as people are increasingly working and studying from home due to the ongoing coronavirus pandemic. This has led to a spike in bandwidth and latency issues, which has created the need for efficient storage infrastructure at the edge, which bodes well for Western Digital. The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 

Western Digital Corporation Price and EPS Surprise

Western Digital Corporation Price and EPS Surprise

Western Digital Corporation price-eps-surprise | Western Digital Corporation Quote

This is expected to have bolstered the uptake of the company’s data center systems portfolio solutions, including latest NVMe SSDs, Ultrastar DC SN340 and Ultrastar DC SN640. This, in turn, might get reflected in the fiscal fourth-quarter revenues.

Moreover, the coronavirus-led shelter-in-place orders have led to robust usage of gaming, video and image applications. This might have driven sales of the company’s gaming solid state drives or SSDs on improving demand from notebooks and video game consoles. This may have benefited the performance in the to-be-reported quarter.

In a bid to capitalize on this demand, Western Digital unveiled the Ultrastar DC SN840 NVMe SSDs and RapidFlex NVMe-oF controllers during the quarter under review, which when combined, create the new OpenFlex Data24 NVMe-oF Storage Platform that is designed to support data infrastructures.

Further, growing demand for NVMe SSDs in data centers, which is driving growth in the NAND market, might have benefited the to-be-reported quarter’s performance. Stabilizing NAND flash prices, per a Statista report, is likely to get reflected in the fiscal fourth-quarter results.

Notably, the consensus for revenues from Data Center Devices Solutions is pegged at $1.62 billion, indicating an improvement of 26.9% from the year-ago reported figure.

Markedly, the Zacks Consensus Estimate for Client Solutions revenues for the to-be-reported quarter is currently pegged at $808 million, suggesting growth of 7% from the prior-year quarter.

However, increasing expenditure on product innovation and development amid stiff competition in the storage market from Seagate STX Micron MU and Intel INTC might have weighed on the fiscal fourth-quarter profitability.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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