Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



How High Can Western Digital Fly?

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Shares of Western Digital (NYSE: WDC  ) hit a 52-week high recently. Let's look at how it got here and see whether clear skies are ahead.

How it got here
The Thailand floods last year crippled much of the hard-drive industry last year, although it hurt Western Digital much more than its closest competitor, Seagate Technology (Nasdaq: STX  ) .

Western Digital has been on the path to recovery, starting off this year with a second-quarter earnings report that beat the Street's estimates. The silver lining was that the shortage of hard drives boosted unit prices, driving gross margins higher in the process. In March, the company closed its acquisition of Hitachi's data-storage business that it had announced a year prior.

Last week, Western Digital hit a fresh 52-week high ahead of its third-quarter earnings release, only to knock shares down by 14% the following day. Ironically, Western Digital's speedy recovery is leading to fears of falling prices, which is what caused the sell-off.

How it stacks up
Let's see how Western Digital stands up to its storage peers, including those that specialize in solid-state drives, or SSDs.

WDC Chart

WDC data by YCharts

We'll include some additional fundamental metrics for a deeper look.



EPS Growth (5-Year Rate)

Net Margin (TTM)


Western Digital 8.9 11.9% 10.1% 16.1%
Seagate Technology 6.8 (7.4%) 14.8% 63.9%
STEC (Nasdaq: STEC  ) 17.8 2.5% 8.2% 7.9%
Intel (Nasdaq: INTC  ) 12 22.8% 23.2% 26.6%
EMC (NYSE: EMC  ) 24.5 15.4% 13.3% 13.7%

Source: Reuters. TTM = trailing 12 months.

One thing to keep in mind when looking at Seagate's seemingly stellar ROE is that it uses more leverage than Western Digital to get there. It has total debt-to-equity of 1.74, compared with Western Digital's 0.96 figure.

SSD specialist STEC has been lagging for years, following a spectacular spike in 2009, while Intel offers its own flavor of SSDs to complement its core chip business. EMC sells consumer-based drives through its Iomega subsidiary, while storage arrays remain its main flame.

What's next?
Western Digital and Seagate are the two big fish in the hard-drive industry, and they've gotten bigger as the sector consolidates. Both are keenly aware of the slow migration to SSDs and will be ready to provide them as those high costs keep coming down, spurring adoption in the process.

Interested in more info on Western Digital? Add it to your Watchlist.

Fool contributor Evan Niu holds no position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Western Digital, EMC, and Intel. Motley Fool newsletter services have recommended buying shares of Intel. The Motley Fool has a disclosure policy. We Fools don't 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.

Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1875346, ~/Articles/ArticleHandler.aspx, 10/20/2016 5:52:45 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,162.35 -40.27 -0.22%
S&P 500 2,141.34 -2.95 -0.14%
NASD 5,241.83 -4.58 -0.09%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/20/2016 4:00 PM
WDC $53.86 Up +0.26 +0.49%
Western Digital CAPS Rating: ***
EMC $0.00 Down +0.00 +0.00%
EMC CAPS Rating: ****
INTC $35.43 Down -0.08 -0.23%
Intel CAPS Rating: ****
STEC.DL $0.00 Down +0.00 +0.00%
STEC CAPS Rating: ***
STX $34.98 Up +0.66 +1.92%
Seagate Technology CAPS Rating: ****