Here's Why Western Digital (WDC) Fell More Than Broader Market

In the latest trading session, Western Digital (WDC) closed at $304.90, marking a -2.84% move from the previous day. The stock's change was less than the S&P 500's daily loss of 1.36%. Elsewhere, the Dow lost 1.64%, while the tech-heavy Nasdaq lost 1.46%.

Shares of the maker of hard drives for businesses and personal computers witnessed a gain of 10.45% over the previous month, beating the performance of the Computer and Technology sector with its loss of 0.24%, and the S&P 500's loss of 1.76%.

The upcoming earnings release of Western Digital will be of great interest to investors. In that report, analysts expect Western Digital to post earnings of $2.34 per share. This would mark year-over-year growth of 72.06%. Meanwhile, the latest consensus estimate predicts the revenue to be $3.23 billion, indicating a 40.72% increase compared to the same quarter of the previous year.

For the annual period, the Zacks Consensus Estimates anticipate earnings of $8.96 per share and a revenue of $12.43 billion, signifying shifts of +81.74% and -6.38%, respectively, from the last year.

Any recent changes to analyst estimates for Western Digital should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the business and profitability.

Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has moved 0.11% higher. Right now, Western Digital possesses a Zacks Rank of #1 (Strong Buy).

Looking at valuation, Western Digital is presently trading at a Forward P/E ratio of 35.02. This represents a premium compared to its industry average Forward P/E of 14.34.

Also, we should mention that WDC has a PEG ratio of 0.69. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. The average PEG ratio for the Computer- Storage Devices industry stood at 1.4 at the close of the market yesterday.

The Computer- Storage Devices industry is part of the Computer and Technology sector. Currently, this industry holds a Zacks Industry Rank of 23, positioning it in the top 10% of all 250+ industries.

The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow WDC in the coming trading sessions, be sure to utilize Zacks.com.

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This article originally published on Zacks Investment Research (zacks.com).

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