Long-established in the hardware industry, Western Digital Corp (WDC, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 1.34%, juxtaposed with a three-month change of 89.14%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Western Digital Corp.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 6/10
- Profitability rank: 5/10
- Growth rank: 2/10
- GF Value rank: 1/10
- Momentum rank: 8/10
Based on the above method, GuruFocus assigned Western Digital Corp the GF Score of 60 out of 100, which signals poor future outperformance potential.
Company Overview
Western Digital Corp is a leading, vertically integrated supplier of hard disk drives (HDDs). The HDD market is a practical duopoly, with Western Digital and Seagate being the two largest players. Western Digital designs and manufactures its HDDs, with much of the manufacturing and workforce located in Asia. The primary consumers of HDDs are data centers. The company boasts a market cap of $23.66 billion and reported sales of $19.36 billion, with an operating margin of 12.83%. Despite its strong market position, the company's financial metrics suggest potential challenges ahead.
Profitability Concerns
Western Digital Corp's low Profitability rank can also raise warning signals. The company's Operating Margin has declined over the past five years, as shown by the following data: 2021: 6.93; 2022: 12.95; 2023: -8.87; 2024: 1.62; 2025: 1.60. Additionally, Western Digital Corp's Gross Margin has also declined over the past five years, as evidenced by the data: 2021: 26.72; 2022: 31.26; 2023: 15.32; 2024: 22.65; 2025: 22.42. This trend underscores the company's struggles to convert its revenue into profits.
Growth Prospects
A lack of significant growth is another area where Western Digital Corp seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by -10% per year over the past three years, which underperforms worse than 76.89% of 2,384 companies in the hardware industry. Stagnating revenues may pose concerns in a fast-evolving market. Lastly, Western Digital Corp's predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Western Digital Corp's financial strength, profitability, and growth metrics, as highlighted by the GF Score, indicate potential underperformance. The company's declining margins and revenue growth, coupled with low predictability, suggest challenges in maintaining its historical performance. Investors should carefully consider these factors when evaluating Western Digital Corp's future prospects. For those seeking companies with stronger GF Scores, GuruFocus Premium members can explore more options using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
