Western Digital (WDC) AI Stock Analysis

• Market Cap: $15.52B
• Dividend Yield: N/A
• Average Volume (3M): 8.28M
• Price to Earnings (P/E): 10.6
• Beta (1Y): 2.02
• Revenue Growth: 38.59%
• EPS Growth: N/A
• Country: US
• Employees: 51,000
• Sector: Technology
• Sector Strength: 48
• Industry: Hardware & Equipment
• EPS (TTM): 4.19
• Shares Outstanding: 347,823,900
• 10 Day Avg. Volume: 9,610,285
• 30 Day Avg. Volume: 8,276,833
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 1.05
• Price to Cash Flow (P/CF): 10.10
• P/FCF Ratio: 10.10
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $81.47
• Price Target Upside: 84.32% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 16

Western Digital shows positive strides in financial recovery, particularly in the HDD segment, which has driven revenue growth and record shipments. However, past financial volatility and current challenges in the Flash segment, including pricing pressure and a decline in revenue outlook, pose risks. Technical analysis indicates mixed signals with a slight caution advised. Despite these challenges, the stock's valuation appears reasonable, providing some support to investors seeking growth potential.

Positive Factors

Business Strategy

Western Digital announced the completion of its separation from the company’s Flash business, and is now operating as a solely HDD-based storage maker, focusing on execution, earnings power improvement, and shareholder returns in a stable HDD market.

Earnings and Profitability

The stable HDD market is seen as supportive of improving earnings expectations, which contributes to the analyst's Buy rating.

Negative Factors

Market Concerns

There are concerns about the stability of flash pricing and margins, the decline in Western Digital’s share of the flash market, the recent significant decline in the consensus FY26 EPS estimate for Western Digital, and the recent management departures at Western Digital.

Western Digital Business Overview & Revenue Model

Company Description

Western Digital Corp. engages in the development, manufacture, market and sale of data storage devices and solutions. It operates through the following product categories: client devices, data center devices and solutions, and client solutions. The client devices category includes mobile, desktop, gaming and digital video hard drives, solid state drives (SSDs), embedded products, and wafers. The data center devices and solutions category covers capacity and performance enterprise hard disk drives (HDDs), enterprise SSDs, data center software, and system solutions. The client solutions category offers removable products, hard drive content solutions, and flash content solutions. The company was founded by Alvin B. Phillips in 1970 and is headquartered in San Jose, CA.

How the Company Makes Money

Western Digital makes money primarily through the sale of its data storage products, which include HDDs and SSDs. These products are sold to a diverse customer base, including individual consumers, businesses, and large-scale data centers. The company's revenue model is largely product-driven, with significant income derived from the enterprise and cloud storage sectors, where there is a high demand for reliable and scalable storage solutions. Additionally, Western Digital benefits from strategic partnerships with technology firms and data center operators, which enhance its market reach and drive sales. The company's earnings are also influenced by factors such as advancements in storage technology, manufacturing efficiencies, and the global demand for data storage capacity.

Western Digital Financial Statement Overview

Summary

Western Digital exhibits a recovering financial performance with improved profitability and revenue growth in the TTM period. The balance sheet is stable with manageable debt levels, but past financial volatility and cash flow concerns require attention. Continued focus on maintaining positive cash flow and profitability will be crucial for long-term stability.

Income Statement

Western Digital's revenue has shown a recovery in the TTM period with a significant growth rate of 19.97% from the previous annual report. The gross profit margin stands at a healthy 37.26%, and the net profit margin has improved to 9.87% from a negative position. However, past volatility and negative EBIT margins in previous years highlight potential risks.

Balance Sheet

The balance sheet reflects a moderate debt-to-equity ratio of 0.61, suggesting a balanced leverage level. The equity ratio of 47.60% indicates a stable capital structure. However, the return on equity (ROE) is relatively low at 12.71%, hinting at potential inefficiencies in generating returns from equity.

Cash Flow

The cash flow statement shows a positive trajectory with a free cash flow growth rate of 156.37% in the TTM period. The operating cash flow to net income ratio is 0.56, reflecting decent cash generation relative to profit. However, past periods of negative free cash flow and operating cash flow pose concerns about cash flow stability.

Breakdown
TTM	Jun 2024	Jun 2023	Sep 2022	Sep 2021	Sep 2020
Income Statement		Total Revenue
15.60B	13.00B	12.32B	18.79B	16.92B	16.74B
	Gross Profit
5.42B	2.94B	1.89B	5.87B	4.52B	3.78B
	EBIT
2.08B	-317.00M	-1.28B	2.39B	1.22B	335.00M
	EBITDA
2.59B	324.00M	-400.00M	3.60B	2.32B	1.93B
	Net Income Common Stockholders
1.25B	-798.00M	-1.71B	1.55B	821.00M	-250.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.48B	1.88B	2.02B	2.33B	3.37B	3.05B
	Total Assets
24.39B	24.19B	24.43B	26.26B	26.13B	25.66B
	Total Debt
8.39B	7.43B	7.07B	7.02B	8.72B	9.57B
	Net Debt
5.91B	5.55B	5.05B	4.70B	5.36B	6.53B
	Total Liabilities
13.44B	13.14B	23.55B	14.04B	15.41B	16.11B
	Stockholders Equity
10.94B	10.82B	10.85B	12.22B	10.72B	9.55B
Cash Flow		Free Cash Flow
436.00M	-781.00M	-1.22B	773.00M	895.00M	177.00M
	Operating Cash Flow
861.00M	-294.00M	-408.00M	1.88B	1.90B	824.00M
	Investing Cash Flow
27.00M	-27.00M	-762.00M	-1.19B	-765.00M	278.00M
	Financing Cash Flow
-1.07B	187.00M	875.00M	-1.72B	-817.00M	-1.51B

Western Digital Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 44.20
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WDC, the sentiment is Negative. The current price of 44.2 is below the 20-day moving average (MA) of 49.98, below the 50-day MA of 48.83, and below the 200-day MA of 51.23, indicating a bearish trend. The MACD of -0.94 indicates Positive momentum. The RSI at 33.57 is Neutral, neither overbought nor oversold. The STOCH value of 2.24 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for WDC.

Western Digital Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NVDA	75 Outperform	$2.83T	39.48	119.18%	0.03%	114.20%	146.26%
AMD	73 Outperform	$163.26B	100.43	2.89%	―	13.69%	91.75%
MU	73 Outperform	$100.88B	26.15	8.30%	0.50%	79.80%	―
WDC	68 Neutral	$15.52B	10.65	10.11%	―	38.59%	―
STX	68 Neutral	$19.92B	17.22	-109.27%	3.00%	24.17%	―
Sector *	59 Neutral	$22.39B	11.53	-18.05%	2.31%	5.00%	-25.89%
INTC	48 Neutral	$92.36B	―	-18.89%	2.34%	-2.08%	-1212.72%

Western Digital Corporate Events

Western Digital Appoints Don Bennett as Interim CFO

On January 30, 2025, Western Digital Corporation announced the appointment of Don R. Bennett as Interim Chief Financial Officer, effective February 28, 2025. Bennett, who has been with the company since 1995, will replace Wissam G. Jabre. The change is part of a leadership transition, with Bennett bringing extensive experience from various roles within the company’s finance and HDD business.

Western Digital Announces Leadership Changes Amid Spin-Off

Western Digital Corporation announced the resignation and appointment of several board members and a change in Chief Executive Officer, effective upon the completion of its planned spin-off of the flash business. David V. Goeckeler will resign as CEO and from the board, with Irving Tan succeeding him as CEO. Tan, an experienced leader in global operations, will also join the board, along with Bruce Kiddoo and Roxanne Oulman. The restructuring aligns with Western Digital’s strategy to separate its flash business, anticipated to impact its market positioning and corporate governance.

Western Digital CFO Wissam Jabre Announces Resignation

On January 10, 2025, Western Digital’s Executive Vice President and Chief Financial Officer, Wissam Jabre, announced his resignation effective February 28, 2025, after the planned spin-off of the company’s flash business. Western Digital has started searching for a new CFO for its hard disk drive business, which is set to undergo significant organizational changes due to the separation.

Western Digital Announces Executive Leadership Change

Western Digital Corporation announced that Robert Soderbery will step down as Executive Vice President and General Manager of the Flash Business, effective January 2, 2025. His departure entitles him to Tier I severance benefits under the company’s Executive Severance Plan, contingent upon his non-revocation of a general release of claims.