Western Digital (NYSE: WDC) only managed to meet estimates last quarter, but investors hope that it will surpass expectations this quarter. The company will unveil its latest earnings on Wednesday, October 19. Western Digital designs, develops, manufactures, and sells hard drives.

What analysts say:

  • Buy, sell, or hold?: The majority of analysts back Western Digital as a buy. But with 61.1% of analysts rating it a buy, Western Digital is still below the mean analyst rating of its nearest 10 competitors, which average 66.7% buys. Analysts like Western Digital better than competitor Seagate Technology overall. Eight out of 18 analysts rate Seagate Technology a buy compared to 11 of 18 for Western Digital. Analysts still rate the stock a Moderate buy, but they are a bit more wary about it compared to three months ago.
  • Revenue Forecasts: On average, analysts predict $2.48 billion in revenue this quarter. That would represent a rise of 3.3% from the year-ago quarter.
  • Wall Street Earnings Expectations: The average analyst estimate is earnings of 96 cents per share. Estimates range from 89 cents to 98 cents.

What our community says:
 CAPS All Stars are solidly backing the stock with 96.3% awarding it an "outperform" rating. The community at large backs the All Stars with 95% assigning it a rating of "outperform." Fools are gung-ho about Western Digital and haven't been shy with their opinions lately, logging 518 posts in the past 30 days. Even with a robust four out of five stars, Western Digital's CAPS rating falls a little short of the community's upbeat outlook.

Management:
 Western Digital's income has fallen year over year by an average of 45.7% over the past five quarters. A year-over-year revenue increase last quarter snaps a streak of two consecutive quarters of revenue declines. Revenue rose 0.9% in the fourth quarter of the last fiscal year and fell 14.7% in the third quarter of the last fiscal year and 5.5% in the second quarter of the last fiscal year.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q4

Q3

Q2

Q1

Gross Margin

19.5%

18.2%

19.2%

18.2%

Operating Margin

7.2%

7%

9.7%

8.8%

Net Margin

6.6%

6.5%

9.1%

8.2%

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