When Western Digital (NASDAQ:WDC) posted weak guidance in its second-quarter report, markets at first reacted negatively. WDC stock plunged below $50 after the report on 10/29. What happened?
WDC posted revenue growing by 29% in the first quarter, to $5.1 billion. EPS was $2.49. The storage supplier benefited from client revenue growth of 72%. Operating cash flow was $521 million. The company is using its cash effectively. It repaid its Term Loan B worth $943 million.
The total gross debt is now $7.7 billion.
Markets fretted over the revenue forecast of $4.7 billion - $4.9 billion. The company is too inexpensive at current levels. Its net profit is on the rise. At its forward P/E for FY 2022 below six times and a price/sales of around 0.8 times, investors have low risks considering this company.
At below $50, WDC is a long-term consideration for investors with a timeframe of at least two quarters. As supply constraints ease in that time, WDC stock will likely recover. Similarly, Micron (NASDAQ:MU), which supplies solid-state chips called NAND, and DRAM for memory, is trading at a discount. Desktops PCs and cloud server systems need such chips. Demand will only continue rising, lifting WDC’s prospects.
