NEW YORK (TheStreet) -- Shares of Western Digital Corp. (WDC) are lower -6.22% to $82.60 on Thursday, resulting from the company's 2014 third quarter earnings report, which showed a decrease in net earnings and revenue.
The company, which develops and manufactures storage solutions allowing people to create, manage, experience and preserve digital content, reported revenue of $3.7 billion for the 2014 third quarter, compared to $3.8 billion reported during the same period last year.
Net income was $375 million, or $1.55 per share, compared to $391 million, or $1.60 per share in the 2013 third quarter.
On a non-GAAP basis, net income for the most recent quarter was $470 million, or $1.94 per share versus the $514 million, or $2.10 per share from the year ago quarter.
TheStreet Ratings team rates WESTERN DIGITAL CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate WESTERN DIGITAL CORP (WDC) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the Computers & Peripherals industry average, but is less than that of the S&P 500. The net income increased by 28.4% when compared to the same quarter one year prior, rising from $335.00 million to $430.00 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 4.1%. Since the same quarter one year prior, revenues slightly increased by 3.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Although WDC's debt-to-equity ratio of 0.27 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 1.43, which illustrates the ability to avoid short-term cash problems.
- 37.08% is the gross profit margin for WESTERN DIGITAL CORP which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, WDC's net profit margin of 10.82% significantly trails the industry average.
- Powered by its strong earnings growth of 30.14% and other important driving factors, this stock has surged by 69.75% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: WDC Ratings Report