Seagate Technology (STX) and Western Digital (WDC) Head-To-Head Review

Seagate Technology (NASDAQ: STX) and Western Digital (NASDAQ:WDC) are both large-cap computer and technology companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, risk, valuation, earnings and analyst recommendations.

Institutional & Insider Ownership

82.6% of Seagate Technology shares are owned by institutional investors. Comparatively, 84.5% of Western Digital shares are owned by institutional investors. 0.9% of Seagate Technology shares are owned by company insiders. Comparatively, 0.3% of Western Digital shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and target prices for Seagate Technology and Western Digital, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Seagate Technology 4 19 6 0 2.07
Western Digital 0 8 21 0 2.72

Seagate Technology presently has a consensus target price of $52.86, suggesting a potential downside of 6.13%. Western Digital has a consensus target price of $112.15, suggesting a potential upside of 32.33%. Given Western Digital’s stronger consensus rating and higher possible upside, analysts plainly believe Western Digital is more favorable than Seagate Technology.

Valuation & Earnings

This table compares Seagate Technology and Western Digital’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Seagate Technology $10.77 billion 1.50 $772.00 million $4.12 13.67
Western Digital $19.09 billion 1.33 $397.00 million $7.90 10.73

Seagate Technology has higher earnings, but lower revenue than Western Digital. Western Digital is trading at a lower price-to-earnings ratio than Seagate Technology, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Seagate Technology and Western Digital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Seagate Technology 7.76% 105.43% 14.74%
Western Digital 0.98% 34.22% 13.22%

Dividends

Seagate Technology pays an annual dividend of $2.52 per share and has a dividend yield of 4.5%. Western Digital pays an annual dividend of $2.00 per share and has a dividend yield of 2.4%. Seagate Technology pays out 61.2% of its earnings in the form of a dividend. Western Digital pays out 25.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Volatility and Risk

Seagate Technology has a beta of 1.69, indicating that its stock price is 69% more volatile than the S&P 500. Comparatively, Western Digital has a beta of 1.04, indicating that its stock price is 4% more volatile than the S&P 500.

Summary

Seagate Technology beats Western Digital on 9 of the 16 factors compared between the two stocks.

Seagate Technology Company Profile

Seagate Technology plc provides data storage technology and solutions in Singapore, the United States, the Netherlands, and internationally. The company manufactures and distributes hard disk drives, solid state drives and their related controllers, solid state hybrid drives, and storage subsystems. Its products are used in enterprise servers and storage systems applications; client compute applications, primarily for desktop and mobile computing; and client non-compute applications, including various end user devices, such as portable external storage systems, surveillance systems, network-attached storage, digital video recorders, and gaming consoles. The company offers external backup storage solutions under the Backup Plus and Expansion product lines, as well as under the Maxtor and LaCie brand names available in capacities up to 120 terabytes. It sells its products primarily to original equipment manufacturers, distributors, and retailers. Seagate Technology plc was founded in 1979 and is headquartered in Dublin, Ireland.

Western Digital Company Profile

Western Digital Corporation, together with its subsidiaries, develops, manufactures, and sells data storage devices and solutions worldwide. It offers performance hard disk drives (HDDs) that are used in enterprise servers, data analysis, and other enterprise applications; capacity HDDs and drive configurations for use in data storage systems and tiered storage models; and enterprise solid state drives (SSDs), including NAND-flash SSDs and software solutions that are designed to enhance the performance in various enterprise workload environments. The company also provides system solutions that offer petabyte scalable capacity; data storage platforms and systems; datacenter software and systems; and HDDs and SSDs for desktop and notebook PCs, gaming consoles, security surveillance systems, and set top boxes. In addition, it offers NAND-flash embedded storage products for mobile phones, tablets, notebook PCs, and other portable and wearable devices, automotive, IoT, and connected home applications; NAND-flash memory wafers; and custom embedded solutions and iNAND embedded flash products, such as multi-chip package solutions that combine NAND-flash and mobile dynamic random-access memory in an integrated package. Further, it provides client solutions that consist of HDDs and SSDs embedded into external storage products; removable cards for use in mobile phones, tablets, imaging systems, still cameras, action video cameras, and security surveillance systems; USB flash drives used in computing and consumer markets; and wireless drive products. Additionally, the company licenses its intellectual property. It sells its products under the HGST, SanDisk, and WD brands to original equipment manufacturers (OEMs), distributors, resellers, cloud infrastructure players, and retailers. It serves storage subsystem suppliers, OEMs, Internet and social media infrastructure players, and PC and Mac OEMs. The company was founded in 1970 and is headquartered in San Jose, California.

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