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What: Shares of hard-drive builder Western digital (NASDAQ:WDC) gained 13.9% in May 2016, according to data from S&P Global Market Intelligence. The surge made up for a 13.5% haircut in April, but Western digital shares are still trading 50% below their year-ago prices.

So what: The April battering continued for another two weeks as both Western Digital and chief rival Seagate Technology (NASDAQ:STX) fell as much as 14% in the first two weeks of the new month.

That's where market analyst group Gartner took a fresh look at the shrinking market for PC systems and concluded that a handful of key niches still could find healthy profit plays in this environment. That's far short of a ringing endorsement for PC vendors and their component suppliers in general, but still better than expected. Both hard-drive vendors started climbing back at this point.

Western Digital also closed the $16 billion acquisition of solid-state storage specialist SanDisk around the middle of the month. Later, company executives jumped on the horn with analysts to update guidance figures for the second quarter. The fresh figures were a hit with investors, and Western Digital pulled away from Seagate for the rest of May. By the end of the month, Western Digital shares had gained 13.9%, while Seagate stopped short at a modest 3.6% increase.

Now what: The guidance update was no starry-eyed victory march. Sales for the combined company are increasing, but merger costs will put a damper on earnings for the rest of 2016. It was just good enough to dampen the nerves of post-merger investors.

So Western Digital pulled off a potentially game-changing merger that promises to keep the company relevant in the SSD storage era. Seagate is still looking for a reasonable answer. Meanwhile, WDC shares are trading at bargain-basement levels, with a P/E ratio of just 13.2 and an enterprise value far below book value. In other words, the stock is priced as if liquidating all its assets would be better than running the business.

None of this makes any sense, given how Western Digital holds the upper hand in a duopoly market. I'm expecting more monthly price gain reports in the future, once the significance of the SanDisk deal starts to sink in.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.