Leading knowledge storage producer Western Digital (NASDAQ: NASDAQ:)
beat analysts’ expectations in Q1 CY2024, with income up 23.3% 12 months on 12 months to $3.46 billion. The firm expects subsequent quarter’s income to be round $3.7 billion, according to analysts’ estimates. It made a non-GAAP revenue of $0.63 per share, bettering from its lack of $1.34 per share in the identical quarter final 12 months.
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Western Digital (WDC) Q1 CY2024 Highlights:
- Revenue: $3.46 billion vs analyst estimates of $3.35 billion (3.2% beat)
- EPS (non-GAAP): $0.63 vs analyst estimates of $0.15 (312% beat)
- Revenue Guidance for Q2 CY2024 is $3.7 billion on the midpoint, roughly according to what analysts had been anticipating
- Gross Margin (GAAP): 29%, up from 10.2% in the identical quarter final 12 months
- Inventory Days Outstanding: 119, up from 114 within the earlier quarter
- Free Cash Flow of $91 million is up from -$242 million within the earlier quarter
- Market Capitalization: $22.71 billion
Founded in 1970 by a Motorola (NYSE:) worker, Western Digital (NASDAQ: WDC) is a number one producer of arduous disk drives, SSDs and flash reminiscence.
Memory SemiconductorsThe fast progress in knowledge technology and the necessity to assist will increase in processing energy for every thing from client units to knowledge middle servers are driving the demand for reminiscence chips. From the content material supply networks and edge computing to the cloud, knowledge storage is a key element underpinning the worldwide know-how structure. On high of that, secular progress drivers like machine studying and the increase in media-rich digital content material are additional accelerating the necessity for storage. Like all semiconductor segments, reminiscence makers are extremely cyclical, pushed by provide and demand imbalances and publicity to client product cycles.
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Sales ProgressWestern Digital’s income has been declining during the last three years, dropping by 6.7% on common per 12 months. As you possibly can see beneath, this was a weaker quarter for the corporate, with income rising from $2.80 billion in the identical quarter final 12 months to $3.46 billion. Semiconductors are a cyclical business, and long-term buyers must be ready for intervals of excessive progress adopted by intervals of income contractions (which might typically provide opportune occasions to purchase).
Western Digital had a superb quarter as its income grew 23.3% 12 months on 12 months, topping analysts’ estimates by 3.2%. Western Digital’s progress inflected from detrimental to constructive this quarter, indicating that the current cycle downturn is probably going within the rearview mirror.
Western Digital returned to constructive income progress this quarter and its administration workforce expects the development to proceed. The firm is guiding to 38.5% year-on-year progress subsequent quarter, and analysts appear to agree, forecasting 38.9% progress over the following 12 months.
Product Demand & Outstanding InventoryDays Inventory Outstanding (DIO) is a crucial metric for chipmakers, because it displays a enterprise’ capital depth and the cyclical nature of semiconductor provide and demand.
In a decent provide atmosphere, inventories are typically steady, permitting chipmakers to exert pricing energy.
Steadily growing DIO is usually a warning signal that demand is weak, and if inventories proceed to rise, the corporate might need to downsize manufacturing.
This quarter, Western Digital’s DIO got here in at 119, which is 11 days above its five-year common, suggesting that the corporate’s stock has grown to greater ranges than we have seen up to now.
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Key Takeaways from Western Digital’s Q1 Results
We had been impressed by Western Digital’s robust gross margin enchancment this quarter. We had been additionally excited its income and EPS outperformed Wall Street’s estimates, pushed by better-than-expected efficiency in its cloud and shopper finish markets. On the opposite hand, its stock ranges elevated, however that could possibly be a results of stockpiling assets forward of demand – administration famous business provide and demand dynamics are bettering. Zooming out, we expect this was a implausible quarter that ought to have shareholders cheering. The market was possible anticipating extra, nonetheless, and the inventory is down 1.1% after reporting, buying and selling at $68.7 per share.