Western Digital Corporation (WDC)
Valuation Overview•Is Western Digital Corporation Overvalued or Undervalued?
Trading at a discount compared to peers, but the underlying intrinsic cash flows struggle to support the current price.
High-quality fundamentals with a strong composite quality score of 88/100, backed by robust profitability and solvency.
Analysts remain bullish, forecasting further upside expansion with consensus targets suggesting solid gains.
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Verdict: Elite compounder with fortress-level fundamentals across every core pillar.
Wall Street is highly bullish, projecting significant upside. However, capital return yields remain modest, driven predominantly by aggressive share repurchases.
Returns capital exclusively via buybacks — no active dividend
WDC exhibits elite business quality, driven by exceptional capital efficiency and highly lucrative margins (highlighted by a massive 40.7% ROIC). This is backed by a fortress balance sheet, holding significant net cash ($527M) and minimal debt risk.
The company is driving exceptional top-line expansion (27.4% 3Y CAGR) paired with stable bottom-line earnings. This growth is supported by elite operational efficiency, sustaining an impressive 34.9% operating margin.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $3.7B | +35.7% | +27.4% | -5.3% | -0.1% | |
| EBITDA | $1.7B | — | +157.6% | — | — | |
| Net Income | $3.2B | +406.4% | — | — | +44.2% | |
| EPS (Diluted) | $8.50 | +384.4% | — | +56.3% | +37.9% | |
| Free Cash Flow | $991.0M | +173.4% | — | +31.4% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 48.9% | 38.6% | 33.8% | 31.0% |
| Operating Margin | 34.9% | 17.7% | 11.4% | 9.4% |
| Net Margin | 72.9% | 26.6% | 12.2% | 6.5% |
| FCF Margin | 24.9% | 9.4% | 2.6% | 5.6% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q3'26Latest | $3.31 | $3.56 | +7.6% | ||
| Q2'26 | $2.39 | $2.72 | +13.8% | ||
| Q1'26 | $1.93 | $2.13 | +10.4% | ||
| Q4'25 | $1.59 | $1.78 | +11.9% | ||
| Q3'25 | $1.48 | $1.66 | +12.2% | ||
| Q2'25 | $1.12 | $1.36 | +21.4% | ||
| Q1'25 | $1.35 | $1.77 | +31.1% | ||
| Q4'24 | $1.72 | $1.78 | +3.5% |
Total return is +313.8% (1Y), outperforming the benchmark by +297.8%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +147.7% | +134.5% | — |
| 1Y | +313.8% | +297.8% | +0.5% |
| 3YCAGR | +138.9% | +115.8% | +2.2% |
| 5YCAGR | +61.2% | +48.6% | +1.8% |
| 10YCAGR | +27.2% | +13.2% | — |
The S&P 500 is at 31.6x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Western Digital Corporation (WDC) valuation, health, and returns.
Western Digital Corporation is estimated to be overvalued under our discounted cash flow framework. relative multiples indicate the stock is Cheap versus peers compared to industry peers. overvalued (implying -24.4% downside from DCF intrinsic value of $333.55)
Western Digital Corporation has multiple valuation anchors: DCF Intrinsic Value: $333.55 | Peer Relative Fair Value: $723.37 | Wall Street Analyst Target: $647.58 (implying +39.4% upside). A convergence of these signals offers higher conviction.
Western Digital Corporation displays excellent financial health with a composite quality score of 88/100, supported by a Altman Z-Score of 21.3 (safe zone), Piotroski F-Score of 7/9, Return on Invested Capital (ROIC) of 40.7%.
Western Digital Corporation returns capital via buybacks instead of dividends, carrying a 1.6% buyback yield and reducing outstanding shares by +4.7% in the last 12 months.
Western Digital Corporation's current growth trajectory is Accelerating. The company achieved +35.7% 1Y revenue growth and +384.4% 1Y EPS growth, compared to its 3Y revenue CAGR of +27.4%.
Wall Street consensus is Buy based on 61 analysts, beating EPS expectations in 100% of recent quarters with a 14-quarter streak. The consensus price target represents a +39.4% change from current levels.
Investment risks for Western Digital Corporation include: -44.8% 1-year max drawdown, high beta (3.03x market volatility). Volatility risk is characterized by a beta of 3.03x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.