How High Can Seagate Technology Fly?

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Shares of Seagate Technology (NYS: STX) hit a 52-week high yesterday. Let's look at how it got here and whether clear skies are ahead.

How it got here
The hard-drive industry has been in disarray ever since the devastating Thailand floods last year, sending ripples throughout the tech industry as a staple PC component.

Seagate lucked out from the disaster, as its own manufacturing facilities weren't flooded, while rival Western Digital (NYS: WDC) got hurt pretty badly by the calamity. It was clear that Seagate would emerge on sounder footing once the waters receded.


Meanwhile, there has been consolidation afoot within the sector, with Seagate and Samsung hooking up their hard-drive parts and Western Digital and Hitachi doing likewise. It was on this stage that Seagate reported strong second-quarter earnings, which included rosy guidance as the company saw healthy demand ramping up.

No wonder it's up more than 65% year-to-date.

How it stacks up
Let's see how Seagate stacks up against some of its hard-drive competitors.

STX Chart

STX data by YCharts.

Let's add in some fundamental metrics for more insight.

Company

P/E (TTM)

Revenue Growth (5-Year Rate)

Net Margin (TTM)

ROE (TTM)

Seagate13.23.6%7.9%29.3%
Western Digital13.417.0%7.4%12.4%
STEC (NAS: STEC) 18.67.4%8.2%7.9%
Intel (NAS: INTC) 11.78.8%24.0%27.2%
EMC (NYS: EMC) 26.212.4%13.0%13.5%

Source: Reuters. TTM = trailing 12 months.

Western Digital is Seagate's closest competitor, although pure-play solid-state drive, or SSD, makers like STEC still present a competitive threat as the industry slowly migrates to flash technology. Intel similarly has its own branded SSD offerings, while EMC owns consumer-focused Iomega to complement its own storage array business.

What's next
The hard-drive industry has seen some dramatic shifts over the decades, and Seagate will need to adapt in order to remain a key player in the industry as SSDs take over.

Seagate is also on deck to report earnings tonight after the close, so we'll see if it can stay ahead of Western Digital a little while longer.

Interested in more info on Seagate Technology? Add it to your watchlist byclicking here.

At the time this article was published Fool contributor Evan Niu holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Intel, EMC, and Western Digital. Motley Fool newsletter services have recommended buying shares of Intel. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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