The 10-second takeaway
For the quarter ended March 29 (Q3), Western Digital beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue grew significantly. Non-GAAP earnings per share contracted significantly. GAAP earnings per share shrank significantly.
Margins contracted across the board.
Western Digital reported revenue of $3.76 billion. The 21 analysts polled by S&P Capital IQ foresaw revenue of $3.61 billion on the same basis. GAAP reported sales were 24% higher than the prior-year quarter's $3.04 billion.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $2.10. The 24 earnings estimates compiled by S&P Capital IQ predicted $1.77 per share. Non-GAAP EPS of $2.10 for Q3 were 17% lower than the prior-year quarter's $2.52 per share. GAAP EPS of $1.60 for Q3 were 18% lower than the prior-year quarter's $1.96 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 28.2%, 400 basis points worse than the prior-year quarter. Operating margin was 11.1%, 830 basis points worse than the prior-year quarter. Net margin was 10.4%, 550 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $3.59 billion. On the bottom line, the average EPS estimate is $1.74.
Next year's average estimate for revenue is $15.10 billion. The average EPS estimate is $8.06.
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 1,319 members out of 1,393 rating the stock outperform, and 74 members rating it underperform. Among 294 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 282 give Western Digital a green thumbs-up, and 12 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Western Digital is hold, with an average price target of $49.20.
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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 of Motley 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.