Is Western Digital (WDC) Poised to Beat Earnings Estimates? - Analyst Blog
29 Aprile 2014 - 10:00PM
Zacks
Storage solutions provider Western Digital
Corp. (WDC) is set to report third-quarter 2014 results on
Apr 30.
Last quarter, the company delivered 5.29% positive earnings
surprise. Let’s see how things are shaping up for this
announcement.
Factors to Consider this Quarter
Western Digital reported better-than-expected second-quarter
results. However, the company’s guidance remained tepid as
management cited seasonal factors. Moreover, the recent
acquisitions will have dilutive effect on the company’s bottom
line.
Nonetheless, we remain encouraged by the company’s launch of a
string of storage devices (Thunderbolt-powered dual drive storage
solution, My Cloud EX2 and USB 3.0 Touro S mobile external hard
drives) under the mobile and cloud segment.
These product launches have come at an opportune moment as
storage services related to smartphones and tablets are being
adopted on a large scale. The company is expected to get good
mileage from its cloud-based business.
Moreover, strategic acquisitions to expand its offerings in the
SSD segment and the company’s strategic shift in business toward
non-PC applications remain the catalysts, going forward.
However, continued investments in product innovation could
flatten margins in the near term. Competition from Seagate
Technology (STX), SanDisk (SNDK) and
Fusion-io also remain the concerns.
Earnings Whispers?
Our proven model does not conclusively show that Western Digital
is likely to beat earnings this quarter. That is because a stock
needs to have both a positive Earnings ESP and a Zacks Rank of #1,
2 or 3 for this to happen. That is not the case here as we see
below.
Zacks ESP: The Most Accurate estimate stands at
$1.88, in line with the Zacks Consensus Estimate. Hence, the
difference is 0.00%.
Zacks Rank: Western Digital has a Zacks Rank #2
(Buy) which when combined with a 0.00% ESP makes surprise
prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing a negative estimate revision momentum.
Other Stocks to Consider
ON Semiconductor Corp. (ONNN) has an Earnings
ESP of +6.67% and a Zacks Rank #1 (Strong Buy).
ON SEMICON CORP (ONNN): Free Stock Analysis Report
SANDISK CORP (SNDK): Free Stock Analysis Report
SEAGATE TECH (STX): Free Stock Analysis Report
WESTERN DIGITAL (WDC): Free Stock Analysis Report
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