Western Digital (WDC), a prominent player in the computer storage devices industry, recently released its quarterly financial report for the period ending September 2023.
The company’s performance has turned heads as it managed to beat earnings expectations, offering a glimmer of hope in a challenging market. In this article, we’ll break down the key numbers and discuss what could be on the horizon for Western Digital.
Earnings Surprise:
Western Digital posted a quarterly loss of $1.76 per share, surpassing the Zacks Consensus Estimate of a loss of $1.88. This marks an earnings surprise of 6.38%.
It’s a notable improvement compared to a year ago when the company reported earnings of $0.20 per share. This quarter’s result continues a trend of exceeding consensus estimates, as the company has done so in three of the last four quarters.
Revenue Performance:
While the earnings numbers are encouraging, Western Digital’s revenue for the same period was $2.75 billion, slightly exceeding the Zacks Consensus Estimate by 3.10%.
However, this figure falls short when compared to the $3.74 billion in revenues reported a year ago. Similar to its earnings, Western Digital has managed to top consensus revenue estimates in four of the last four quarters.
Share Performance:
Western Digital’s stock has performed impressively this year, outperforming the S&P 500 by a wide margin, with gains of about 23.5% compared to the broader market’s 7.2% increase.
What’s Next for Western Digital?
As investors assess Western Digital’s performance, the question on everyone’s mind is, “What’s next for the stock?” Predicting stock market movements is challenging, but one reliable measure to gauge the future performance of a company is its earnings outlook.
Research has shown a strong correlation between short-term stock movements and trends in earnings estimate revisions. Therefore, it’s crucial to track how expectations for the upcoming quarters and fiscal year change.
Earnings Outlook:
Currently, the estimate revisions trend for Western Digital is mixed. While the direction and magnitude of estimate revisions may change following the recent earnings report, the current status has assigned Western Digital a Zacks Rank #3 (Hold). T
his suggests that the stock is expected to perform in line with the broader market.
Industry Impact:
Keep in mind that the performance of Western Digital is also influenced by industry dynamics. The Computer-Storage Devices industry is currently ranked in the top 38% of the 250-plus Zacks industries, indicating relative strength.
Research indicates that companies in the top 50% of Zacks-ranked industries tend to outperform those in the bottom 50% by a significant margin.
Upcoming Earnings Report:
Investors should also keep an eye on Teradata (TDC), another company in the same industry, which is set to release its quarterly results on November 6.
The consensus EPS estimate for Teradata is $0.41 per share, reflecting a year-over-year change of +32.3%. However, it’s worth noting that the consensus estimate has been revised 8.8% lower over the last 30 days, signaling potential uncertainty.
Western Digital’s recent earnings report has shown promise, with the company consistently surpassing expectations. However, the stock’s future performance will hinge on various factors, including management’s guidance and industry trends.
Investors should closely monitor earnings estimate revisions and industry dynamics to make informed decisions regarding their investments.
Additionally, Teradata’s upcoming earnings release will shed further light on the state of the industry, adding to the complexity of the investment landscape.