Seagate Technology PLC STX 0.19% surged nearly 14 percent on Wednesday after a big Q4 earnings beat. Despite no company-specific news, rival Western Digital Corp WDC 0.88% was along for the ride, jumping 5.2 percent on the day.
Correlation Between Seagate And Western Digital
Correlation between the two data storage giants in nothing new. According to Portfolio Visualizer, Seagate and Western Digital stocks have a daily correlation of 0.66.
With the two companies competing head-to-head and the two stocks trading mostly in tandem, which company makes the better buy at this point? Here’s a look at the numbers.
Value And Growth
From a value perspective, Western Digital appears to have the slight edge. Western Digital’s forward PE is only 9.5 compared to Seagate’s 11.2 forward PE. In addition, Western Digital has lower P/B and P/FCF ratios as well.
From a growth perspective, Western Digital also appears to have the edge. In the past four quarters, the company has reported year-over-year revenue growth of -21 percent, +10 percent, +40 percent and +47 percent. Seagate has struggled to find its growth footing recently, reporting revenue growth of -22 percent, -9 percent, -4 percent and -3 percent.
Earnings
Both companies reported Q4 earnings just this week. Western Digital reported an EPS beat and year-over-year earnings growth of 44 percent. Seagate also reported an EPS beat and year-over-year earnings growth of 68 percent.
Although the two stocks trade at a relatively high correlation, Western Digital’s superior performance in the past few quarters has been reflected…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
