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Current Data
Current Price $39.43 PEG 0.4
Market Cap ($M) $9,015. EPS TTM ($) $4.19
3
Shares Outstanding (M) 227.0 P/E TTM 9.4X
Institutional Holdings % 92.1% EPS Estimated 2010 ($) $5.96
Insider Holdings % 0.4% P/Estimated EPS 6.6X
Beta 1.54 Target Value ($) $52.81
Latest Quarter Reported 01/01/1 Dividend Yield % 0.00
0
The last time we wrote about Western Digital was in March 2009. At
the time, WDC was trading at $17.21 and we provided a twelve month
target price of $44.27. In retrospect, our estimate of value seems a
mite aggressive. However, the market has vindicated us the recent
price of $39.43 is awfully close to our target. Looking ahead, we have a
twelve month target price of $52.81.
Recent Developments
My Book® 3.0 External Hard Drives are the First Certified SuperSpeed USB 3.0 Storage
Devices Available on the Market
WD® ENTERS TRADITIONAL ENTERPRISE HDD MARKET WITH FIRST SAS PRODUCT
By The Numbers
Quarterly sales for the last four reported quarters show consistent
improvement. For the quarter ending 03/09, sales stood at $1,590.0
million and compared to $2,111.0 million in 03/08. In each of the
subsequent quarters, sales increased so that by 10/09, sales were
ahead of the prior year quarter. For the twelve month period ending
01/10, sales stood at $8,348.0 million as compared to the equivalent
prior twelve month period of $8,036.0 million, a 3.9% gain.
Over the past four quarters, earning reflected the decline in sales and
the same pattern of picking up when sales turned around. In the
quarter ending 03/09, EPS came in at $0.22 compared with $1.23 in
03/08. Earnings picked up in each subsequent quarter so that in 10/09,
EPS was reported at $1.25 as compared to $0.93. In 01/10, quarterly
EPS was $1.85 as compared with $0.06 in 01/09. EPS for the twelve
month period ending 01/10 totaled $4.18. In comparison, in the one
year ago period, EPS totaled $3.16. Consensus EPS for FYE 06/10 is
$6.03.
Gross margins for the TTM are a strong 21.8%. Reported gross margins
in FY09 were down to 17.9%. For the five year period 07/05 – 07/09,
gross margins averaged 18.24%. Similarly, operating margins popped
in the TTM to 12.7% from FY 09’s low of 7.0%. Again, net margins
reflect the same trend spiking to 11.5% in the twelve month period
ending 01/10 from FY 09’s margin of 6.3%. Historically, WDC reports a
net margin in the 9.0% - 10.0% range.
Conclusion