Western Digital Corp (WDC) – Global Equity Analytics & Research Service (GEARS)

Global Equity Analytics & Research Service LLC.
Robert Gay, Director of Research — Website: http://www.the-gears.com

Western Digital Corp (WDC) $39.08 – May 17, 2010 (http://www.google.com/finance?q=wdc)

Current Positive factors are:

  • Lower interest costs/sales(inverted)
  • Higher net shareholder wealth
  • Increased cash from operations ROI
  • Increased cash from operating atv ROI
  • Rising gross margin
  • Rising EBITDA margin
  • Lower SGA costs to sales(inverted)
  • Higher sales growth
  • Higher income taxes to sales
  • Rising free cash flow margin

    Disclaimer: Robert Gay (GEARS) owns WDC in his Covestor Earnings Surprise Model.

    As of May 3, 2010, the shares of Western Digital Corp have advanced by significantly relative to the S&P index since the December, 2008 low.

    The shares have been highly correlated with trends in Growth Factors. The dominant factor in the Growth group is net shareholder wealth which has been highly correlated with the share price.

    Currently, sales growth is high in the record of the company and higher than 1Q2010. The shares have been correlated with the direction of sales growth.

    The company is recording a rising gross margin. SG&A expenses are low in the record of the company, but falling. Higher gross margins and lower SG&A expenses are producing a leveraged acceleration in EBITD relative to sales.

    Capital expenditures are low in the record of the company and rising. That implies that the company has limited scope for further CapX reduction and rising expenditures are slowing the free cash flow growth rate relative to sales. The EBITD margin is rising at a faster rate than capital expenditures, producing a rising free cash flow margin.

    The shares have been very highly inversely correlated with interest costs/sales(inverted).

    The shares are trading at lower-end of the volatility range in a 16 month rising relative share price trend.