Western Digital Corp (WDC) stock analysis

P/E below its 5-year median

Western Digital's P/E of 11.2 is below its own 5-year median of 14.3.

P/E below the industry

Western Digital's P/E of 11.2 is below the Computer and Office Equipment median of 26.0.

EV/EBITDA above its 5-year median

Western Digital's EV/EBITDA of 17.7 is above its 5-year median of 15.7.

P/B above the industry

Western Digital's price-to-book of 11.58 is above the Computer and Office Equipment median of 3.71.

Trading below fair value

The share price of $289.20 is below our fair value estimate of $412.16.

Margin of safety over 20%

The price is 29.8% below fair value, more than the 20% cushion we look for.

Revenue growing 10%+ a year

Revenue grew 27.4% a year over the last three fiscal years.

EPS growth over 3 years

Needs positive EPS three years ago and today.

Earnings growth accelerating

Net income grew 289% over the last twelve months, against a 5-year average of 62.9% a year.

Growing faster than the industry

Revenue grew 43.0% over the last twelve months; the Computer and Office Equipment median is 11.2%.

Guidance lowered

Western Digital lowered its fiscal second quarter of 2027 Interest and other expense, net outlook on Oct 22, 2026.

Gross margin improving

Gross margin was 52.6% over the last twelve months, against 40.6% a year earlier.

Return on equity over 15%

Return on equity was 132% over the last twelve months and averaged 29.6% over five years.

Return on capital over 10%

Return on invested capital was 62.2%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Western Digital's return on equity of 132% is above the Computer and Office Equipment median of 7.5%.

Earnings grew over 5 years

Net income grew 62.9% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 69.2% over the last twelve months, against a 5-year average of 12.3%.

Net margin above the industry

Western Digital's net margin of 69.2% is above the Computer and Office Equipment median of 3.8%.

Low debt

Debt is 8.4% of shareholders' equity, under the 40% we consider low.

Debt falling against equity

Debt to equity fell from 80.8% five years ago to 8.4%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 616% of total debt.

Interest well covered

Operating income covers interest expense 48.8 times.

Short-term assets cover short-term debts

Current assets are 1.43 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 16.68; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Western Digital paid dividends worth 0.2% of the share price over the last twelve months.

Yield below Treasuries

The 0.2% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Western Digital yields 0.2%.

Dividend was cut

The dividend per share fell by more than 10% at least once in the last 8 fiscal years.

Covered by earnings

Dividends take 2.0% of net income.

Covered by free cash flow

Dividends take 4.6% of free cash flow.