Western Digital (WDC)
Information Technology · $108B market cap · SEC CIK 0000106040
ahead of 55% of the S&P 500 · #36 of 73 in Information Technology
Next reports on Jan 27, 2027, with analysts expecting $5.93 in earnings per share.
52-week range $132.43 to $799.87. 64% below its 52-week high and 118% above its low.
The case for WDC
- Revenue up 43.0% on the year.
- Cheap for its growth: 10.7× earnings, where 25% a year of growth would justify about 46×.
- Generated $3.5B of free cash flow in FY2026, 27% of revenue.
- Earns 114% on shareholder equity.
- 69% of revenue drops through to net profit.
- Holds more cash ($1.6B) than long-term debt ($0).
The case against
- Operating profit covers its interest bill only 2.0 times.
- Revenue has shrunk 5.3% a year over five years.
- Only 37% of FY2026's $9.4B profit arrived as free cash.
- Swings harder than the market (beta 2.34).
- The price trend is weak (41/100): +77.8% over a year, −33.9% over three months, 64% below its 52-week high.
What the score is made of
Each factor is half a curve over reported figures and half a rank among the other Information Technology companies (momentum is judged against fixed thresholds only), and the five are blended by weight. The score is where that blend places it in the S&P 500. It describes the last filing and the current price. It is not a forecast.
| Valuewhat you pay for the earnings and cash, against the growth you get | 82 |
|---|---|
| Growthhow fast revenue and earnings are moving, this year and over five | 49 |
| Profitabilityhow much of the revenue becomes profit, and how much of that is cash | 76 |
| Momentumhow the price has behaved lately | 41 |
| Stabilityhow violently it moves, what it owes and what it pays you | 24 |
- Each factor except momentum is half fixed thresholds, half rank among the 73 Information Technology companies.
The financials
Revenue growth
Is the business growing? Yes
| Last 12 months | +43.0% |
|---|---|
| Over 5 years | −5.3% a year |
| FY2026 revenue | $12.9B (+36%) |
Free cash flow
Is it generating real cash? Less than its profits suggest
| FY2026 free cash flow | $3.5B |
|---|---|
| Of revenue | 27% |
| Of profit | 37% |
Profit margins
Is profitability improving? Yes, improving
| Gross margin | 53% |
|---|---|
| Operating margin | 33% |
| Net margin, FY25 → FY26 → now | 19.8% → 72.9% → 69.2% |
Debt vs. cash
Is the balance sheet healthy? Yes, more cash than debt
| Cash | $1.6B |
|---|---|
| Long-term debt | $0 |
| Net cash | $1.6B |
| Years to repay | 0.0 yrs |
Valuation
Is the stock price reasonable? Yes, it looks cheap
| P/E | 10.7× |
|---|---|
| Fair P/E for its growth | 46× |
| P/FCF | 30.6× |
| Forward P/E | 12.2× |
| EV / EBITDA | 20.6× |
At 10.7× earnings it trades well below the 46× that 25% a year of growth would justify. At 30.6× free cash flow it trades below that same mark.
The financials, five years deep
Pulled from Western Digital's XBRL filings on SEC EDGAR. Italic rows are worked out from the others.
| FY2026 | FY2025 | FY2024 | FY2023 | FY2022 | |
|---|---|---|---|---|---|
| Revenue growth | |||||
| Revenue | $12.9B | $9.5B | $6.3B | $6.3B | $18.8B |
| Change on the year | +36% | +51% | +1% | −67% | — |
| Free cash flow | |||||
| Free cash flow | $3.5B | $1.3B | −$781M | −$1.2B | $758M |
| Of revenue | 27% | 13% | −12% | −20% | 4% |
| Profit margins | |||||
| Gross margin | 48.9% | 38.8% | 28.1% | 22.2% | 31.3% |
| Operating margin | 34.5% | 24.5% | −6.4% | −8.8% | 12.7% |
| Net margin | 72.9% | 19.8% | −12.6% | −26.9% | 8.2% |
| Debt vs. cash | |||||
| Cash | $1.6B | $2.1B | $1.6B | $2.0B | $2.3B |
| Long-term debt | $0 | $2.5B | $5.7B | $5.9B | $7.0B |
| Net cash (debt) | $1.6B | −$371M | −$4.1B | −$3.8B | −$4.7B |
What Western Digital says it does
Western Digital was founded in 1970 and is a Standard & Poor’s 500 (“S&P 500”) company headquartered in San Jose, California. We are a leading developer, manufacturer, and provider of data storage devices and solutions based on hard disk drive (“HDD”) technology. HDDs are critical components in the worldwide data infrastructure market, powering the AI-driven digital economy. HDDs provide reliable, cost-effective, high-capacity storage needs for a wide range of applications, ranging from cloud data centers, enterprise storage systems, edge computing, and smart video to client and consumer devices. At Western Digital, we believe that data storage provides the strategic foundation for the AI-driven data economy. We focus on designing and building data storage solutions that are intelligent, efficient, and reliable. We execute on this mission through rigorous scientific research, engineering excellence, and deep customer collaboration, so…
Risk factors WDC lists in its 10-K
- Loss of revenue from Cloud or other key customers could harm our operating results
- If we do not properly manage technology transitions and product development and introduction, our competitiveness and operating results may be negatively affected
- We are dependent on a limited number of qualified suppliers who provide critical services, materials or components, and a disruption in our supply chain could negatively affect our business
- Long-term agreements expose us to certain execution, financial, and market risks, which could be significant
- We are subject to risks related to product defects, which could result in product recalls or epidemic failures and could subject us to warranty, litigation or indemnification claims that exceed our expectations or estimates
- The loss of our key management, staff and skilled employees or the inability to hire and develop new employees could negatively impact our business prospects
- Failure to successfully execute on strategic initiatives including acquisitions, divestitures or cost saving measures may negatively impact our future results
- Our strategic relationships subject us to risks and uncertainties that could harm our business
- Adverse global or regional conditions could harm our business
- Changes in U.S. trade policy and the impact of tariffs and retaliatory actions may have a material adverse effect on our business and results of operations
- Our industry is subject to variations in demand, pricing and competitive factors, which can negatively impact our business
- Our operations, and those of certain of our suppliers and customers, are subject to substantial risk of damage or disruption
- We may be adversely affected by the risks, challenges, and evolving regulatory landscape associated with the use of AI in our operations, product development, and business practices
- Our incurrence of additional debt may negatively impact our liquidity, restrict our operations and ability to respond to business opportunities, and increase our vulnerability to adverse economic and industry conditions
- If the completed Separation of Sandisk were to fail to qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, we and our stockholders could be subject to significant tax liabilities
- Fluctuations in currency exchange rates as a result of our international operations may negatively affect our operating results
- Increases in our customers’ credit risk could result in credit losses and term extensions under existing contracts with customers with credit losses could result in an increase in our operating costs
- The nature of our industry and its reliance on IP and other proprietary information subjects us and our suppliers, customers and partners to the risk of significant litigation
- Our reliance on IP and other proprietary information subjects us to the risk that these key components of our business could be copied by competitors
- Our aspirations, disclosures and actions related to environmental, social and governance (“ESG”) matters expose us to risks that could adversely affect our reputation and performance
- The exclusive forum provisions in our Bylaws could limit our stockholders’ ability to bring a claim in a judicial forum that it finds favorable for disputes with the company or its directors, officers or other employees