Advertisement
Canada markets closed

  • S&P/TSX

    22,259.16
    -31.46 (-0.14%)
     

  • S&P 500

    5,187.67
    -0.03 (-0.00%)
     

  • DOW

    39,056.39
    +172.13 (+0.44%)
     

  • CAD/USD

    0.7282
    -0.0006 (-0.08%)
     

  • CRUDE OIL

    79.23
    +0.24 (+0.30%)
     

  • Bitcoin CAD

    84,409.21
    -1,513.35 (-1.76%)
     

  • CMC Crypto 200

    1,308.76
    +14.09 (+1.09%)
     

  • GOLD FUTURES

    2,316.60
    -5.70 (-0.25%)
     

  • RUSSELL 2000

    2,055.14
    -9.51 (-0.46%)
     

  • 10-Yr Bond

    4.4920
    +0.0290 (+0.65%)
     

  • NASDAQ futures

    18,163.00
    -23.50 (-0.13%)
     

  • VOLATILITY

    13.00
    -0.23 (-1.74%)
     

  • FTSE

    8,354.05
    +40.38 (+0.49%)
     

  • NIKKEI 225

    38,294.95
    +92.58 (+0.24%)
     

  • CAD/EUR

    0.6775
    -0.0001 (-0.01%)
     

Is Western Digital (WDC) Poised to Beat Earnings Estimates? - Analyst Blog

Zacks Equity Research
Updated

We expect storage solution provider Western Digital Corp. (WDC) to beat expectations when it reports second quarter fiscal 2015 results on Jan 27.

Why a Likely Positive Surprise?

Our proven model shows that Western Digital is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate ($2.13 per share) and the Zacks Consensus Estimate ($2.10 per share), is at +1.43%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks Rank #3 (Hold): Note that stocks with Zacks Rank of #1, #2 and #3 have a significantly higher chance of beating earnings. The sell rated stocks (#4 and #5) should never be considered going into an earnings announcement.  

The combination of Western Digital’s Zacks Rank #3 and +1.43% ESP makes us very confident in looking for a positive earnings beat on Jan 27.

What is Driving the Better than Expected Earnings?

Shift toward non-PC applications, secular growth of digital data, modest growth in TAM and higher demand for storage are expected to lead to a positive earnings surprise in the soon to be reported quarter. Additionally, its growing exposure to the small and medium business space and synergies from acquisitions remain growth drivers.

We remain encouraged by the company’s launch of a string of storage devices under the mobile and cloud segment. With such launches and product innovations, we expect Western Digital to strengthen its market position against the likes of Seagate Technology.

Also, Western Digital’s entry into the wireless devices market comes at a time when storage services related to smartphones and tablets are witnessing large-scale adoption. These factors are expected to be the growth catalysts, going forward.

Moreover, it is noteworthy that Western Digital has surpassed the Zacks Consensus Estimate over the past four quarters with an average surprise of 4.4%.

Other Stocks to Consider

Western Digital is not the only firm looking up this earnings season. Here are some other companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Apple Inc. (AAPL) with Earnings ESP of +0.78% and a Zacks Rank #1 (Strong Buy)

The Boeing Company (BA) with Earnings ESP of +1.44% and a Zacks Rank #2 (Buy)

Cognizant Technology Solutions Corporation (CTSH) with Earnings ESP of +1.70% and a Zacks Rank #2


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
WESTERN DIGITAL (WDC): Free Stock Analysis Report
 
BOEING CO (BA): Free Stock Analysis Report
 
APPLE INC (AAPL): Free Stock Analysis Report
 
COGNIZANT TECH (CTSH): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research