Earnings Preview: Western Digital Reports Fiscal Q2 Results Monday

Jan.18.12 | About: Western Digital (WDC)

Western Digital Corp. (NYSE:WDC) is due to report earnings after the closing bell on January 23, 2012. Below we can see the results of Western Digital Corp. over the last few earnings periods.

Western Digital Corporation, through its subsidiaries, provides solutions for the collection, storage, management, protection, and use of digital content primarily audio and video worldwide. The company was founded in 1970 and is headquartered in Irvine, California. WDC trades an average of 3.1 million shares per day.

52 Week High: $41.87
52 Week Low: $22.64
Book Value: $24.46
Float Short: 2.06%

On average, 16 analysts are expecting a drop of $-0.39 in earnings per share compared to last quarter's results of $1.10. A beat of $0.71 per share will top the estimated mean earnings. Analyst estimates range between $0.58 and $0.90 per share.

The P/E ratio has been discounted, as the current trailing twelve months P/E ratio is 9.8, while the forward P/E ratio is now 7.97. An upside earnings report may put a lot of wind in the sails. I am bullish on Western Digital short term and long term. In the short term, the stock broke higher, above the 200-day moving average. The shorter-term moving averages are now trending higher as well. The PE is about as dirt cheap as you could possibly want for a well-known, respected company. Supply issues in the industry will work themselves out, and I believe any breaks in share price should be viewed as a buying oppertunity.

For the same fiscal period year-over-year, revenue has declined to $9.53 billion for 2011 vs. $9.85 billion for 2010. The bottom line has falling earnings year-over-year of $726.00 million for 2011 vs. $1.38 billion for 2010.The company's earnings before interest and taxes are falling with an EBIT year-over-year of $781.00 million for 2011 vs. $1.53 billion for 2010. Lower revenue along with a drop in earnings is often one of the last signs to get out of the way of a falling stock price.

Here is a look at the fiscal year revenue:

paid2trade.com revenue gross bar chart for WDC Click to enlarge

Gross reported revenue compared to the mean estimate (rounded):

Fiscal Quarter Ending Month-Year Revenue Estimates Actual $ Difference Difference %
Sep-11 $ 2.49 B $ 2.69 B $ 206.29 M 8.29%
Jun-11 $ 2.28 B $ 2.40 B $ 121.05 M 5.3%
Mar-11 $ 2.26 B $ 2.25 B $ -3.21 M -0.14%
Dec-10 $ 2.35 B $ 2.48 B $ 126.04 M 5.37%
Sep-10 $ 2.35 B $ 2.40 B $ 44.69 M 1.9%
Click to enlarge

M = millions, B = billions.
Differences are rounded.
Some one-time items are often excluded in reported EPS.

paid2trade.com Quarterly Estimates And Actual EPS results WDC Click to enlargeReported earnings per share compared to the mean estimate. Differences are rounded.

The total short interest number of shares for WDC:

paid2trade.com short interest tool. The total short interest number of shares for WDC Click to enlarge

The number of days to cover short interest based on average daily trading volume for WDC:

paid2trade.com number of days to cover short interest based on average daily trading volume for WDC Click to enlarge

I use a proprietary blend of technical analysis, financial crowd behavior, and fundamentals in my short-term trades, and while not totally the same in longer swing trades to investments, the concepts used are similar. You may want to use this article as a starting point of your own research with your financial planner. I use Seeking Alpha, Edgar Online, and Yahoo Finance for most of my data. I use the confirmed symbols from earnings.com that I believe to be of the most interest.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in WDC over the next 72 hours.