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Seagate Tech (STX)
NASDAQ:STX
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Seagate Tech
(NASDAQ:STX)68Neutral
Positive Factors
Financial Performance
Despite a new higher tax rate assumption, FY26/27 EPS estimates are still 5-15% above consensus, indicating stronger-than-expected performance.
Supply Chain Strategy
Seagate's acquisition of Intevac represents another move by the company to vertically integrate its HDD supply chain.
Negative Factors
Market Performance
Since the DeepSeek news in late January, STX has underperformed the market by 6 points, causing concerns about the longevity of the HDD upcycle.
Seagate Tech (STX) vs. S&P 500 (SPY)
Market Cap
$19.92B
Dividend Yield3%
Average Volume (3M)3.43M
Price to Earnings (P/E)17.2
Beta (1Y)1.61
Revenue Growth24.17%
EPS GrowthN/A
CountryUS
Employees30,000
SectorTechnology
Sector Strength48
IndustryHardware & Equipment
Share Statistics
EPS (TTM)5.46
Shares Outstanding211,707,400
10 Day Avg. Volume3,457,871
30 Day Avg. Volume3,433,276
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.64
Price to Cash Flow (P/CF)24.00
P/FCF Ratio17.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$123.44Price Target Upside33.55% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering17
Seagate Tech Business Overview & Revenue Model
Company DescriptionSeagate Technology Plc engages in the development, production, and distribution of data storage products and electronic data storage solutions. Its products include hard disk drives, solid state hybrid drives, solid state drives, peripheral component interconnect express cards, serial advanced technology attachment controllers, storage subsystems and computing solutions. It offers its products under the Backup Plus and Expansion product lines, and Maxtor and LaCie brands. The company was founded by Finis Conner, Syed Iftikar, Doug Mahon, David Thomas Mitchell, and Alan F. Shugart in 1978 and is headquartered in Dublin, Ireland.
How the Company Makes MoneySeagate Technology generates revenue primarily through the sale of its data storage products. The company's key revenue streams include the production and distribution of hard disk drives (HDDs) and solid-state drives (SSDs) for both the consumer and enterprise markets. Seagate's extensive product lineup supports diverse applications, such as personal computing, data centers, cloud computing, and enterprise storage solutions. The company benefits from strategic partnerships with major technology companies and original equipment manufacturers (OEMs), which help drive demand for its storage solutions. Additionally, Seagate leverages its global sales network to reach a wide range of customers, thus maintaining a robust revenue model centered around the increasing need for data storage and management in the digital age.
Seagate Tech Financial Statement Overview
Summary
Seagate Tech shows strong cash flow generation and improving profitability, with a gross profit margin of 31.8% and a net profit margin of 14.7%. However, the balance sheet reveals significant financial leverage concerns due to negative stockholders' equity, indicating potential risk.Income Statement
Seagate Tech's income statement shows improving profitability metrics in the TTM with a gross profit margin of 31.8% and a net profit margin of 14.7%, indicating strong operational efficiency. However, the revenue growth is volatile, having decreased significantly in the past year but showing recovery in the TTM. EBIT and EBITDA margins have improved from negative figures in 2023 to positive, reflecting a turnaround in operational performance.68
Positive
Balance Sheet
The balance sheet reveals financial leverage concerns with a negative stockholders' equity, leading to an undefined debt-to-equity ratio for the TTM. This indicates potential financial risk despite improved asset management. The equity ratio is negative due to liabilities exceeding assets, highlighting a need for financial restructuring to ensure long-term stability.45
Neutral
Cash Flow
Cash flow analysis for Seagate Tech shows strong operating cash flow relative to net income, and free cash flow has grown by 24.1% in the TTM, demonstrating effective cash management. The company generates sufficient cash flows to cover capital expenditures, indicating a healthy ability to reinvest in the business.72
Positive
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 8.04B | 6.55B | 7.38B | 11.66B | 10.68B | 10.51B | Gross Profit |
| 2.55B | 1.55B | 1.35B | 3.47B | 2.92B | 2.84B | EBIT |
| 1.36B | 452.00M | -342.00M | 1.96B | 1.49B | 1.30B | EBITDA |
| 1.82B | 1.03B | 301.00M | 2.41B | 1.90B | 1.76B | Net Income Common Stockholders |
| 1.18B | 335.00M | -529.00M | 1.65B | 1.31B | 1.00B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.53B | 1.36B | 786.00M | 615.00M | 1.21B | 1.72B | Total Assets |
| 9.38B | 7.74B | 7.56B | 8.94B | 8.68B | 8.93B | Total Debt |
| 5.86B | 6.07B | 5.45B | 5.65B | 5.14B | 4.17B | Net Debt |
| 4.33B | 4.71B | 4.67B | 5.03B | 3.93B | 2.45B | Total Liabilities |
| 8.85B | 9.23B | 8.76B | 8.84B | 8.04B | 7.14B | Stockholders Equity |
| 526.00M | -1.49B | -1.20B | 109.00M | 631.00M | 1.79B |
| Cash Flow | Free Cash Flow | ||||
| 824.00M | 664.00M | 626.00M | 1.28B | 1.13B | 1.13B | Operating Cash Flow |
| 938.00M | 918.00M | 942.00M | 1.66B | 1.63B | 1.71B | Investing Cash Flow |
| 93.00M | 126.00M | 217.00M | -352.00M | -466.00M | -635.00M | Financing Cash Flow |
| -580.00M | -473.00M | -988.00M | -1.90B | -1.67B | -1.60B |
Seagate Tech Technical Analysis
Negative
92.43
Price Trends
95.92
Negative
98.57
Negative
99.32
Negative
Market Momentum
-0.13
Positive
34.62
Neutral
11.63
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STX, the sentiment is Negative. The current price of 92.43 is below the 20-day moving average (MA) of 99.24, below the 50-day MA of 95.92, and below the 200-day MA of 99.32, indicating a bearish trend. The MACD of -0.13 indicates Positive momentum. The RSI at 34.62 is Neutral, neither overbought nor oversold. The STOCH value of 11.63 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for STX.
Seagate Tech Risk Analysis
Seagate Tech disclosed 35 risk factors in its most recent earnings report. Seagate Tech reported the most risks in the “Ability to Sell” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Seagate Tech Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $24.74B | 9.86 | 11.21% | 2.76% | 3.30% | 25.00% | |
71 Outperform | $19.03B | 17.31 | 114.33% | 2.20% | 5.46% | 23.49% | |
68 Neutral | $19.92B | 17.22 | -109.27% | 3.00% | 24.17% | ― | |
68 Neutral | $15.52B | 10.65 | 10.11% | ― | 38.59% | ― | |
67 Neutral | $234.79B | 39.40 | 24.14% | 2.64% | 1.45% | -20.56% | |
66 Neutral | $66.01B | 14.74 | -179.12% | 1.89% | 7.99% | ― | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% |
* Technology Sector Average
Performance Comparison
STX
Seagate Tech
92.43
0.97
1.06%
IBM
International Business Machines
251.35
61.57
32.44%
NTAP
NetApp
94.87
-8.12
-7.88%
WDC
Western Digital
44.20
-4.69
-9.59%
HPE
Hewlett Packard Enterprise
18.89
0.61
3.34%
DELL
Dell Technologies
97.25
-19.50
-16.70%
Seagate Tech Earnings Call Summary
Earnings Call Date: Jan 21, 2025 | % Change Since: -8.71% | Next Earnings Date: Apr 23, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong revenue and profitability growth, driven by increased demand in the cloud and successful product advancements such as HAMR. However, supply constraints and seasonal market declines present challenges in the near term.Highlights
Strong Revenue Growth
Seagate achieved a 7% sequential revenue growth in the December quarter, closing calendar 2024 on a strong note.
Non-GAAP Earnings Per Share Achievement
Non-GAAP earnings per share exceeded $2 for the first time in 12 quarters.
Nearline Product Revenue Surge
Nearline product revenue almost doubled year-over-year in the December quarter and showed nearly 60% growth for the entire calendar year.
HAMR Product Milestones
Seagate completed qualification and started ramping HAMR-based products, announcing sampling drives with capacities of up to 36 terabytes.
Operating Income and Margin Growth
Non-GAAP operating income increased by 22% sequentially, with an operating margin of 23.1%.
Gross Margin Improvement
Non-GAAP gross margin expanded by 220 basis points to 35.5%, marking the seventh consecutive quarter of sequential gross margin improvement.
Lowlights
Supply Constraints Impacting Revenue
Production issues led to supply constraints for the March quarter, resulting in an estimated $200 million revenue impact.
Debt and Leverage
Seagate's debt balance was $5.7 billion at the end of the December quarter, with a net leverage ratio of 2.5x.
Seasonal Decline in VIA and Legacy Markets
Ongoing demand strength expected to partially offset seasonal declines in the VIA and legacy markets.
Company Guidance
During the Seagate Technology Q2 2025 earnings call, the company provided robust guidance marked by a 7% sequential revenue growth in the December quarter, reaching $2.33 billion. The non-GAAP gross margin expanded by 220 basis points to 35.5%, while non-GAAP earnings per share exceeded $2 for the first time in 12 quarters. The growth was driven by a significant uptake in the cloud sector, with nearline product revenue almost doubling year-over-year and showing a near 60% increase for the entire calendar year. The company also reported a 50% year-over-year revenue growth and a fourfold increase in non-GAAP operating income, with mass capacity revenue and exabyte shipments increasing 9% sequentially. Looking ahead, Seagate expects fiscal Q3 revenue to be around $2.1 billion, plus or minus $150 million, with a non-GAAP EPS projected at $1.70, plus or minus $0.20, despite a temporary $200 million revenue impact due to supply constraints. The company remains optimistic about the future, citing strong demand from cloud customers and ongoing advancements in their HAMR-based Mosaic platform, which is expected to drive significant profitable revenue growth in fiscal 2025 and beyond.Seagate Tech Corporate Events
Private Placements and FinancingBusiness Operations and Strategy
Seagate Tech Strengthens Financial Position with New Credit Deal
Positive
Feb 3, 2025
On January 30, 2025, Seagate Technology Holdings plc entered into a new $1.3 billion credit agreement, replacing its previous 2019 credit agreement. This strategic financial move, involving several major banks, offers Seagate an unsecured revolving credit facility until 2030, enhancing its financial flexibility. The agreement includes provisions for letters of credit and swingline loans, with interest rates tied to corporate credit ratings. The comprehensive covenant structure and guarantee agreement by Seagate and its subsidiaries ensure robust financial oversight and obligations management, potentially reinforcing Seagate’s market position and stakeholder confidence.
DividendsBusiness Operations and StrategyFinancial Disclosures
Seagate Reports Strong Q2 2025 Financial Results
Positive
Jan 21, 2025
On January 21, 2025, Seagate announced its fiscal second quarter results for 2025, reporting a revenue increase to $2.33 billion and a GAAP diluted EPS of $1.55. The company achieved a decade-high gross margin and declared a quarterly cash dividend of $0.72 per share, payable on April 2, 2025. Seagate is optimistic about delivering profitable growth in fiscal 2025 with the advancement of its technology and product offerings, particularly in HAMR-based Mozaic products.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.