Western Digital (NASDAQ:WDC) Shares Up 10% Following Strong Earnings

Key Points

• Western Digital's shares surged 10% following a quarterly earnings report that exceeded expectations, with earnings per share at $1.66 against a $1.48 consensus estimate.
• The company reported a 30% year-over-year revenue increase to $2.61 billion, beating analyst expectations of $2.45 billion.
• A $2 billion stock repurchase plan has been authorized, allowing the company to buy back up to 11.7% of its outstanding shares, signaling board confidence in the stock's valuation.

Shares of Western Digital Corporation (NASDAQ:WDC - Get Free Report) shot up 10% on Thursday following a better than expected earnings announcement. The stock traded as high as $78.50 and last traded at $78.56. 13,512,611 shares traded hands during trading, an increase of 69% from the average session volume of 7,982,228 shares. The stock had previously closed at $71.43.

The data storage provider reported $1.66 earnings per share for the quarter, topping analysts' consensus estimates of $1.48 by $0.18. The firm had revenue of $2.61 billion during the quarter, compared to analysts' expectations of $2.45 billion. Western Digital had a net margin of 14.13% and a return on equity of 24.93%. Western Digital's quarterly revenue was up 30.0% compared to the same quarter last year. During the same quarter in the prior year, the business earned $1.44 EPS.

Western Digital Announces Dividend

The firm also recently declared a quarterly dividend, which will be paid on Thursday, September 18th. Investors of record on Thursday, September 4th will be paid a dividend of $0.10 per share. The ex-dividend date is Thursday, September 4th. This represents a $0.40 dividend on an annualized basis and a yield of 0.5%. Western Digital's dividend payout ratio is currently 7.77%.

Western Digital announced that its Board of Directors has authorized a share buyback program on Tuesday, May 13th that allows the company to buyback $2.00 billion in shares. This buyback authorization allows the data storage provider to reacquire up to 11.7% of its stock through open market purchases. Stock buyback programs are often an indication that the company's board of directors believes its shares are undervalued.

Wall Street Analyst Weigh In

A number of analysts recently weighed in on the stock. Morgan Stanley decreased their price target on shares of Western Digital from $85.00 to $83.00 and set an "overweight" rating for the company in a research note on Tuesday, July 29th. Susquehanna raised their target price on shares of Western Digital from $40.00 to $62.00 and gave the stock a "neutral" rating in a research note on Friday. Summit Insights upgraded shares of Western Digital from a "hold" rating to a "buy" rating in a research note on Wednesday, April 30th. Wells Fargo & Company raised their target price on shares of Western Digital from $80.00 to $95.00 and gave the stock an "overweight" rating in a research note on Thursday. Finally, TD Cowen raised their target price on shares of Western Digital from $58.00 to $90.00 and gave the stock a "buy" rating in a research note on Thursday. Four investment analysts have rated the stock with a hold rating and eighteen have issued a buy rating to the stock. According to data from MarketBeat.com, the company presently has an average rating of "Moderate Buy" and a consensus target price of $78.74.

Insider Activity

In other Western Digital news, SVP Gene M. Zamiska sold 1,729 shares of the firm's stock in a transaction dated Thursday, June 5th. The shares were sold at an average price of $54.88, for a total transaction of $94,887.52. Following the completion of the transaction, the senior vice president directly owned 40,089 shares in the company, valued at approximately $2,200,084.32. This trade represents a 4.13% decrease in their position. The transaction was disclosed in a legal filing with the SEC, which can be accessed through this link. Also, CEO Irving Tan sold 11,379 shares of the firm's stock in a transaction dated Tuesday, May 13th. The shares were sold at an average price of $48.19, for a total transaction of $548,354.01. Following the transaction, the chief executive officer owned 605,481 shares of the company's stock, valued at $29,178,129.39. This trade represents a 1.84% decrease in their ownership of the stock. The disclosure for this sale can be found here. Insiders have sold a total of 13,353 shares of company stock valued at $657,454 over the last 90 days. 0.30% of the stock is currently owned by insiders.

Hedge Funds Weigh In On Western Digital

Hedge funds have recently added to or reduced their stakes in the business. BNP Paribas grew its holdings in shares of Western Digital by 0.6% during the fourth quarter. BNP Paribas now owns 26,415 shares of the data storage provider's stock worth $1,575,000 after buying an additional 166 shares in the last quarter. CVA Family Office LLC grew its holdings in shares of Western Digital by 23.7% during the second quarter. CVA Family Office LLC now owns 904 shares of the data storage provider's stock worth $58,000 after buying an additional 173 shares in the last quarter. Forum Financial Management LP grew its holdings in shares of Western Digital by 3.4% during the second quarter. Forum Financial Management LP now owns 5,895 shares of the data storage provider's stock worth $377,000 after buying an additional 193 shares in the last quarter. UMB Bank n.a. grew its holdings in shares of Western Digital by 6.2% during the second quarter. UMB Bank n.a. now owns 3,465 shares of the data storage provider's stock worth $222,000 after buying an additional 202 shares in the last quarter. Finally, Private Wealth Management Group LLC grew its holdings in shares of Western Digital by 102.5% during the second quarter. Private Wealth Management Group LLC now owns 399 shares of the data storage provider's stock worth $26,000 after buying an additional 202 shares in the last quarter. 92.51% of the stock is currently owned by hedge funds and other institutional investors.

Western Digital Trading Up 0.8%

The firm has a market capitalization of $26.91 billion, a PE ratio of 14.98, a P/E/G ratio of 0.98 and a beta of 1.58. The company has a quick ratio of 0.84, a current ratio of 1.08 and a debt-to-equity ratio of 0.47. The business's fifty day moving average price is $62.22 and its 200 day moving average price is $53.76.

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.