WDC - Western Digital: Even Without The Spin-Off The Company Remains Undervalued

2024-03-24 07:26:17 ET

Summary

• Western Digital Corporation reported better than expected EPS and saw an increase in EPS expectations from 21 analysts.
• The company plans to separate its HDD and Flash business units, which may enhance its stock price and financial flexibility.
• Despite risks related to debt, tariffs, and taxes, Western Digital remains a buy due to expected FCF growth.

Western Digital Corporation ( WDC ) recently delivered better than expected EPS, and 21 different analysts increased their EPS expectations . I believe that the recent separation of two business units reported by WDC, which may take place in 2024 may explain the recent optimism. In any case, given recent restructuring efforts, without the split, future FCF growth would justify a higher stock valuation. I do believe that risks related to the debt, tariffs, and taxes are worth considering. However, I think that WDC remains a buy given expected FCF.

Western Digital Corporation

This is a manufacturing company and provider of digital storage services, both through NAND Flash and hard drive technologies, with a variety of clients ranging from individual consumers to large companies. To the latter, the company also offers consulting services for the assembly of storage structures and related topics. ...

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