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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Western Digital Corporation (XNAS:WDC) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
WDC
Name:
WESTERN DIGITAL CORPORATION (XNAS:WDC)
Sector:
276.00M
Industry:
Computer Hardware
CEO:
Mr. Stephen Milligan
Total Employees:
65,000
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -372.17% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF WESTERN DIGITAL CORPORATION(WDC) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND COMPUTER HARDWARE INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
41.65
One Month Price Target:
$42.
Six Month Price Target :
$43.76
Likely Price in One Year's Time:
Ticker:
$45.87
Likely Trading Range Today Under (Normal Volatility)
$41.42
Price Upper limit ($) :
$41.9
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$38.73
This week:
$35.12
This month :
$28.59
Other Primary facts
Market Cap:
13.10B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
314.49M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
17.75%
-20.44%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$55.20
$49.01
$28.10
$34.29
Medium risk (<10%) entry points
Buy Call
Sell Call
$47.00
Buy Put:
Sell Put:
$45.68
$36.28
$37.62
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
WDC
Sharpe Ratio:
0.61%
Comparison:
WDC, is amongst the top 60% stocks with highest risk-adjusted returns
Sharpe ratio is -81.37% lower than the industry
& is -73.43% lower than the market/S&P 500 average
Average Returns/Yield of
WDC
Daily returns:
0.03%
Weekly returns:
0.15%
Monthly returns:
0.59%
Yearly returns:
26.14%
Comparison of returns:
Average annual returns/yield (last 3 years) is -72.82% below industry average
Classification:
WDC, is amongst the top 60% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.53
Statistical test of Returns:
WDC has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
3.43%
Weekly Volatility:
7.66%
Monthly Volatility:
15.33%
Yearly Volatility:
53.09%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.24%
Volatility in last five trading days has been -63.74% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-7.01%
Weekly VaR:
-15.67%
Monthly VaR:
-31.35%
How Much Can the price of
WDC
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-27%
Worst case (decline):
>85%
This translates to price declining to:
$30.24
This translates to price declining to:
$6.25
Severe Crash Probability
Risk of crash in next 6/12 months: Low (<25%)
What is Value at Risk (VaR)?
Risk Fundamentals
WDC is a 121.23% riskier investment compared to the market/S&P 500 & is 89.53% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is 7.80% above industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
WDC
Beta in relation to market/S&P 500--1.51
Expected beta in 1 year's time:
0.889
Expected beta in 3 year's time:
1.257
Unlevered (debt free) Beta:
0.941
Beta in relation to Nasdaq (XNAS):
1.148
Beta in relation to all global stocks::
0.979
Beta Comparison & Analysis
Beta of competitors/peers::
1.49
Beta is 1.08% higher than peers
Average Industry Beta:
1.224
Beta is 23.03% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
18.10%
Sustainable growth rate is -59.73% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
-0.064
Alpha is -143.56% below industry average alpha yield
Alpha is -405% below the market average
Analysis of Cost of Capital of
WDC
Equity cost of capital:
0.135
Equity cost of capital is 16.74% above industry mean WACC
Unlevered (without debt) cost of capital:
8.41%
Before-tax cost of debt:
3.63%
After-tax cost of debt:
2.86%
Overall debt rating:
Upper medium A grade (third highest grade),CO8<=0.0429,"Medium BBB grade (Fourth highest grade)
Weighted average cost of capital (WACC):
2.86%
WACC is 5.50% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$61.00
Revenue growth rate per share of (3Y):
1.15
Annual revenue growth rate is -138.62% below industry average
EPS:
$5.79
Expected Annual growth rate of EPS (3Y):
0.00%
-
Free cash flow (FCF) per share:
$4.65
Balance sheet equity growth per share: -100.00%
Equity growth rate per share is 5808.97% higher than the industry
Debt per share
$26.30
EBITDA per share
$11.05
Valuation Analysis Today of
WDC
P/E Ratio:
8.76
P/E Ratio of Competitors/Peers:
282.59
P/E ratio is -96.90% lower than main peers & is -34.63% lower than the industry
Stock price/value with industry average P/E ratio: $77.62
WDC is -46.34% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $87.73
Present value of the expected future dividends only: $7.43
P/S (Price to Sales ratio):
0.68
Price to sales ratio is -75.81% below the industry mean
P/B (Price to book value ratio):
1.15
Price to free cash flow: 8.95
Price to free cash flow ratio is -83.17% lower than the industry
Net income growth rate (3Y):
18.44%
Net income growth rate is -80.00% lower than the industry average net income growth rate
Dividend Analysis
-
Dividend yeild: 2.40%
Previous Dividend: $0.50
Previous adjusted dividend: $0.50
Previous Dividend: $1.00
-
-
Average dividend payment (long-term): $0.50
Average dividend increase/decrease (growth rate) % per period: 0.00%
-
-
-
Previous dividend payment date: 17/04/2020
Previous dividend record date: 04/03/2020
Previous dividend declaration date: 13/02/2020
Dividend History:
2020-04-02--$0.50
--$0.00
--$0.00
2020-01-02--$0.50
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
72.79%
Net debt to equity ratio:
46.04%
Debt to assets ratio:
31.34%
Net debt to assets ratio:
19.82%
Debt-to-asset ratio is -48.95% below industry average
Ability to repay debt:
Interest coverage ratio:
11.25
Interest coverage ratio is 128.06% more than industry average
Looking forward:
Debt growth rate:
-8.88%
Annual debt growth is -133% lower than industry average debt growth rate
Debt repayment rate in last quarter: 2.51%
Analysis of Key Statistics
Correlation of price movement with the market:
0.652
Statistical significance of correlation:
WDC has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.599
Stock price is 8.79% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.599
Correlation of price movement with Nasdaq (^IXIC):
0.02
Covariance of price movement with the market:
0.039
Kurtosis
4.962
Returns have moderate fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.288
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
WDC
Gross Profit Margin Ratio:
125%
Operating Profit Margin Ratio:
13.05%
Operating profit margin is 72.74% higher than the industry
Net Profit Margin Ratio:
125%
Effective Tax Rate:
17.53%
Effective tax rate is 8.62% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
16.03%
Return on equity (ROE) is 19.84% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
6.90%
Return on assets (ROA) is -7.52% lower than the industry
Financial Leverage:
1.5x
Current Ratio:
2.09
Current ratio is -9.40% below industry average
Cash Conversion Cycle (days):
10.5
Cash conversion cycle is -86.78% below industry average
The remaining useful life of property plant & equipment is: 9.5 years
Stock based compensation to net income ratio:
4.17%
In-depth Efficiency Analysis
Revenue generated per employee:
295.2K
Each employee generates -59% less revenue than industry average revenue per employee
EBITDA generated per employee:
53.5K
Each employee generates -48% less EBITDA than industry average revenue per employee
Profit generated per employee:
28.0K
Each employee generates -60% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
4.2K
Each employee generates -65% less free cash flow than industry average revenue per employee
Assets/Capital per employee
254.4K
Each employee generates -65% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
Research & development (R&D) investment growth rate-- -0.80%
Growth rate in R&D investment/expenditure is -52.96% lower than the industry
Competitors/Peer firms of
WDC
NETAPP, INC. (XNAS:NTAP)
MONOLITHIC POWER SYSTEMS, INC. (XNAS:MPWR)
SS&C TECHNOLOGIES HOLDINGS, INC. (XNAS:SSNC)
ZoomInfo Technologies Inc (XNAS:ZI)
ENPHASE ENERGY, INC. (XNAS:ENPH)
Affirm Holdings Inc (XNAS:AFRM)
SPLUNK INC. (XNAS:SPLK)
NICE LTD (XNAS:NICE)
AKAMAI TECHNOLOGIES, INC. (XNAS:AKAM)
Current Analyst Ratings
Strong buy�29%
Buy�63%
Hold�29%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
4/1/22
Revenue:
19.19B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
13.19B
6.00B
2.32B
-
1.15B
-
-
3.47B
5.00M
309.00M
959.00M
3.48B
2.50B
1.82B
2.21B
387.00M
1.82B
Statement of Cash Flow
Date:
Period:
250.00M
Differed Income Tax :
27.00M
Stock Based Compensation :
76.00M
Change in Working Capital :
- 440000.00K
Accounts Receivables:
- 188000.00K
Other Working Capital:
- 228000.00K
Other Non-Cash Items:
- 2000.00K
Net Cash Provided by Operating Activities:
521.00M
Investments in PP&E:
- 245000.00K
Net Acquisitions:
-
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
10/1/21
2022
Q1
3.29B
-
3.29B
2.45B
3.54B
576.00M
9.86B
3.26B
10.07B
364.00M
-
-
2.85B
16.54B
-
26.39B
2.27B
251.00M
-
-
2.18B
4.71B
8.27B
2.05B
10.32B
-
15.03B
3.00M
8.15B
- 167000.0K
3.38B
October 1, 2021 at 6:00:00 AM
16.66B
11.36B
26.39B
-
8.52B
5.2B
-
- 67000.00K
- 312000.00K
- 213000.00K
-
-
-
- 76000.00K
- 289000.00K
-
- 80000.00K
3.29B
3.37B
521.00M
- 245000.00K
276.00M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
WDC
2023
2024
2025
2026
2027
$46.10
$495.99
$546.19
$601.47
$662.34