Is Western Digital (WDC) Stock Undervalued Right Now?

By Zacks Investment ResearchStock MarketsMar 16, 2020 11:50PM ET

www.investing.com/analysis/is-western-digital-wdc-stock-undervalued-right-now-200516743

Is Western Digital (WDC) Stock Undervalued Right Now?

By Zacks Investment Research | Mar 16, 2020 11:50PM ET

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One stock to keep an eye on is Western Digital (WDC). WDC is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock holds a P/E ratio of 6.88, while its industry has an average P/E of 18.02. WDC's Forward P/E has been as high as 17.64 and as low as 6.44, with a median of 12.21, all within the past year.

Another valuation metric that we should highlight is WDC's P/B ratio of 1.33. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 3.56. Within the past 52 weeks, WDC's P/B has been as high as 2.25 and as low as 1.03, with a median of 1.61.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. WDC has a P/S ratio of 0.64. This compares to its industry's average P/S of 1.25.

These are only a few of the key metrics included in Western Digital's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, WDC looks like an impressive value stock at the moment.

Western Digital Corporation (NASDAQ:WDC): Free Stock Analysis Report

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Is Western Digital (WDC) Stock Undervalued Right Now?

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