Yahoo Finance What's in Store for Western Digital (WDC) in Q3 Earnings?
Western Digital WDC is scheduled to report third-quarter fiscal 2023 results on May 8.
For the to-be-reported quarter, management projects non-GAAP loss per share to be between $1.40 and $1.70. The Zacks Consensus Estimate is pegged at a loss of $1.55 per share against the earnings of $1.65 reported in the prior-year quarter.
Western Digital expects non-GAAP revenues in the range of $2.6-$2.8 billion. The consensus estimate is currently pegged at $2.76 billion, indicating a decline of 36.9% from the prior-year quarter’s reported figure.
The company surpassed the Zacks Consensus Estimate in two of the last four quarters while missed twice. It has a trailing four-quarter negative earnings surprise of 111.4%, on average. In the past year, shares of WDC have lost 46% of their value compared with the sub-industry’s decline of 22.9%.
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Factors to Note Ahead of Q3 Release
Western Digital’s fiscal third-quarter performance is likely to have been affected by weakening consumer demand owing to prevailing global macroeconomic uncertainties and rising inflation. Apart from inventory corrections by consumers, supply-chain troubles (easing somewhat) and economic slowdown in China related to COVID-19 continue to remain headwinds.
Moreover, declining trends witnessed in PC shipments in first-quarter calendar-year 2023 are likely to have negatively impacted hard disk drive (HDD) sales. This may have affected the company’s performance in the quarter under review. Higher costs associated with ramping up next-generation energy-assisted hard drives amid stiff competition in the disk-drive market might have dented fiscal third-quarter profits.
To battle macroeconomic uncertainties, WDC is focused on reducing capital investments and operating expenses to better align cash flow and cost structure with market conditions.
Coming to the product group, the Zacks Consensus Estimate for Flash revenues is pegged at $1.226 billion. Flash demand is under pressure due to lower flash pricing and reduced demand for enterprise SSD products. The downtrend is caused as many big cloud customers have entered a digestion period, noted Western Digital. Strength in the company’s SanDisk, SanDisk Professional and WD_BLACK product lines bode well.
The Zacks Consensus Estimate for fiscal third-quarter HDD revenues is pegged at $1.508 billion. HDD revenues are expected to have been negatively impacted by reduced demand in other capacity enterprise product channels. However, the adoption of SMR and CMR hard drives (especially 22-terabyte drive exabyte shipments) remains healthy and is likely to have cushioned the segment’s performance.
Western Digital Corporation Price and EPS Surprise
Western Digital Corporation price-eps-surprise | Western Digital Corporation Quote
Recent Developments
On Apr 3, Western Digital had announced a security breach that has affected some of its systems. The company reported that on Mar 26, 2023, an unauthorized third party was able to gain access to several of its systems. The company stated that it had taken steps to address the issue, which included implementing an incident response plan and initiating an investigation. It also implemented leading outside security and forensic experts to assist with the investigation, which is still in the early stage, added the company
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Western Digital this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Western Digital has an Earnings ESP of 0.00% and presently carries a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are some stocks you may consider as our model shows that these have the right combination of elements to beat on earnings this season.
PayPal Holdings PYPL has an Earnings ESP of +2.15% and currently carries a Zacks Rank #3. PYPL is scheduled to report first-quarter fiscal 2023 earnings on May 8. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for PayPal’s to-be-reported quarter’s earnings and revenues is pegged at $1.09 per share and $6.98 billion, respectively. PYPL surpassed earnings estimates in the preceding four quarters, delivering an average surprise of 6.6%. The stock has lost 16.4% in the past year.
Tyson Foods TSN has an Earnings ESP of +1.85% and currently has a Zacks Rank #3. TSN is scheduled to report second-quarter fiscal 2023 earnings on May 8.
The Zacks Consensus Estimate for TSN’s to-be-reported quarter’s earnings and revenues is pegged at 81 cents per share and $13.6 billion, respectively. The stock has lost 33.4% in the past year.
Skyworks Solutions SWKS has an Earnings ESP of +0.45% and presently carries a Zacks Rank #3. SWKS is slated to release second-quarter fiscal 2023 numbers on May 8.
The Zacks Consensus Estimate for SWKS’ to-be-reported quarter’s earnings and revenues is pegged at $2.01 per share and $1.15 billion, respectively. The stock has lost 2.1% in the past year.
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Western Digital Corporation (WDC) : Free Stock Analysis Report
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PayPal Holdings, Inc. (PYPL) : Free Stock Analysis Report
