Financial Analysis: Western Digital (WDC) & The Competition

Western Digital (NASDAQ:WDC) is one of 81 publicly-traded companies in the “Technology Hardware, Storage & Peripherals” industry, but how does it contrast to its rivals? We will compare Western Digital to related businesses based on the strength of its profitability, institutional ownership, analyst recommendations, risk, valuation, earnings and dividends.

Dividends

Western Digital pays an annual dividend of $0.60 per share and has a dividend yield of 0.1%. Western Digital pays out 2.5% of its earnings in the form of a dividend. As a group, “Technology Hardware, Storage & Peripherals” companies pay a dividend yield of 3.5% and pay out 41.6% of their earnings in the form of a dividend.

Insider and Institutional Ownership

92.5% of Western Digital shares are owned by institutional investors. Comparatively, 51.5% of shares of all “Technology Hardware, Storage & Peripherals” companies are owned by institutional investors. 0.2% of Western Digital shares are owned by insiders. Comparatively, 10.8% of shares of all “Technology Hardware, Storage & Peripherals” companies are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Western Digital and its rivals gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Western Digital	$12.92 billion	$9.42 billion	18.98
Western Digital Competitors	$23.93 billion	$3.72 billion	6.31

Western Digital’s rivals have higher revenue, but lower earnings than Western Digital. Western Digital is trading at a higher price-to-earnings ratio than its rivals, indicating that it is currently more expensive than other companies in its industry.

Risk and Volatility

Western Digital has a beta of 2.14, suggesting that its stock price is 114% more volatile than the S&P 500. Comparatively, Western Digital’s rivals have a beta of 1.60, suggesting that their average stock price is 60% more volatile than the S&P 500.

Profitability

This table compares Western Digital and its rivals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Western Digital	72.95%	48.15%	25.79%
Western Digital Competitors	-493.26%	-14.53%	4.44%

Analyst Ratings

This is a summary of current ratings for Western Digital and its rivals, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Western Digital	0	5	18	2	2.88
Western Digital Competitors	1053	4285	7558	358	2.54

Western Digital currently has a consensus price target of $534.56, indicating a potential upside of 16.35%. As a group, “Technology Hardware, Storage & Peripherals” companies have a potential upside of 20.47%. Given Western Digital’s rivals higher possible upside, analysts clearly believe Western Digital has less favorable growth aspects than its rivals.

Summary

Western Digital beats its rivals on 11 of the 15 factors compared.

Western Digital Company Profile

Western Digital Corporation develops, manufactures, and sells data storage devices and solutions in the United States, China, Hong Kong, Europe, the Middle East, Africa, rest of Asia, and internationally. It offers client devices, including hard disk drives (HDDs) and solid state drives (SSDs) for desktop and notebook personal computers (PCs), gaming consoles, and set top boxes; and flash-based embedded storage products for mobile phones, tablets, notebook PCs, and other portable and wearable devices, as well as automotive, Internet of Things, industrial, and connected home applications. The company also provides enterprise HDDs; enterprise SSDs consisting of flash-based SSDs and software solutions for use in enterprise servers, online transactions, data analysis, and other enterprise applications; and data storage platforms. In addition, it offers external HDD storage products in mobile and desktop form; client portable SSDs; removable cards that are used in consumer devices comprising mobile phones, tablets, imaging systems, and cameras and smart video systems; universal serial bus flash drives for use in the computing and consumer markets; and wireless drive products used in-field backup of created content, as well as wireless streaming of high-definition movies, photos, music, and documents to tablets, smartphones, and PCs. The company sells its products under the Western Digital, SanDisk, and WD brands to original equipment manufacturers, distributors, dealers, resellers, and retailers. Western Digital Corporation was founded in 1970 and is headquartered in San Jose, California.