Seagate Technology PLC (NASDAQ: STX)
surged nearly 14
percent on Wednesday after a big Q4 earnings beat. Despite no company-specific news, rival Western Digital
Corp (NASDAQ: WDC) 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 in its stock movement. In the past year, Western Digital’s stock is up 88.4 percent, while Seagate’s stock is up
64.0 percent.
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