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 A-. 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, attractive valuation levels and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 10.4%. Since the same quarter one year prior, revenues rose by 24.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Although WDC's debt-to-equity ratio of 0.24 is very low, it is currently higher than that of the industry average. To add to this, WDC has a quick ratio of 1.79, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Compared to its closing price of one year ago, WDC's share price has jumped by 106.39%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, WDC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • WESTERN DIGITAL CORP's earnings per share declined by 18.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. 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 ($8.32 versus $6.45).

Western Digital Corporation, through its subsidiaries, engages in the development, manufacture, and sale of storage products and solutions that enable people to create, manage, experience and preserve digital content. Western Digital has a market cap of $15.2 billion and is part of the technology sector and computer hardware industry. The company has a P/E ratio of 8.00, below the S&P 500 P/E ratio of 18.00. Shares are up 51% year to date as of the close of trading on Monday.

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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