Western Digital Beats Estimates Yet Again


Western Digital (NYS: WDC) reported earnings on Jan. 23. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 30 (Q2), Western Digital beat expectations on revenues and crushed expectations on earnings per share.

Compared to the prior-year quarter, revenue contracted significantly, and earnings per share dropped significantly.

Gross margins grew, operating margins grew, net margins dropped.

Revenue details
Western Digital chalked up revenue of $2 billion. The 16 analysts polled by S&P Capital IQ looked for a top line of $1.8 billion. Sales were 19% lower than the prior-year quarter's $2.5 billion.


Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $1.51. The 16 earnings estimates compiled by S&P Capital IQ predicted $0.72 per share on the same basis. GAAP EPS of $0.61 for Q2 were 36% lower than the prior-year quarter's $0.96 per share.


Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 32.5%, 1,330 basis points better than the prior-year quarter. Operating margin was 18.1%, 840 basis points better than the prior-year quarter. Net margin was 7.3%, 180 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $2.1 billion. On the bottom line, the average EPS estimate is $0.97.

Next year's average estimate for revenue is $9.3 billion. The average EPS estimate is $4.12.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 1,282 members out of 1,358 rating the stock outperform, and 76 members rating it underperform. Among 346 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 335 give Western Digital a green thumbs-up, and 11 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Western Digital is outperform, with an average price target of $39.94.

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At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool owns shares of Western Digital. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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