Western Digital Corporation Stock Buy Recommendation Reiterated (WDC)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK (TheStreet) -- Western Digital Corporation (Nasdaq:WDC) has been reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

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Highlights from the ratings report include:

• The revenue growth came in higher than the industry average of 27.6%. Since the same quarter one year prior, revenues rose by 49.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
• Although WDC's debt-to-equity ratio of 0.26 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.49, which illustrates the ability to avoid short-term cash problems.
• Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
• WESTERN DIGITAL CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, WESTERN DIGITAL CORP increased its bottom line by earning $6.45 versus $3.09 in the prior year. This year, the market expects an improvement in earnings ($7.54 versus $6.45).
• The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Computers & Peripherals industry. The net income increased by 117.2% when compared to the same quarter one year prior, rising from $239.00 million to $519.00 million.

Western Digital Corporation, through its subsidiaries, engages in the development, manufacture, and sale of storage products that enable people to create, manage, experience, and preserve digital content. The company principally offers hard drives comprising 3.5-inch and 2.5-inch form factors. Western Digital has a market cap of $8.18 billion and is part of the technology sector and computer hardware industry. The company has a P/E ratio of 4.4, below the S&P 500 P/E ratio of 17.7. Shares are up 8.5% year to date as of the close of trading on Wednesday.

You can view the full Western Digital Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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