Head to Head Analysis: Western Digital Corporation (WDC) and NetApp (NTAP)

NetApp (NASDAQ: NTAP) and Western Digital Corporation (NASDAQ:WDC) are both large-cap computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, earnings, analyst recommendations, dividends, valuation, institutional ownership and profitability.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for NetApp and Western Digital Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NetApp 3 19 12 0 2.26
Western Digital Corporation 0 6 25 1 2.84

NetApp presently has a consensus price target of $43.84, suggesting a potential upside of 6.85%. Western Digital Corporation has a consensus price target of $113.02, suggesting a potential upside of 27.68%. Given Western Digital Corporation’s stronger consensus rating and higher probable upside, analysts clearly believe Western Digital Corporation is more favorable than NetApp.

Insider and Institutional Ownership

92.1% of NetApp shares are owned by institutional investors. Comparatively, 82.4% of Western Digital Corporation shares are owned by institutional investors. 0.5% of NetApp shares are owned by company insiders. Comparatively, 0.5% of Western Digital Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Dividends

NetApp pays an annual dividend of $0.80 per share and has a dividend yield of 1.9%. Western Digital Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 2.3%. NetApp pays out 38.6% of its earnings in the form of a dividend. Western Digital Corporation pays out 156.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares NetApp and Western Digital Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NetApp 10.47% 24.13% 7.21%
Western Digital Corporation 2.08% 21.23% 7.96%

Volatility & Risk

NetApp has a beta of 1.22, indicating that its stock price is 22% more volatile than the S&P 500. Comparatively, Western Digital Corporation has a beta of 1.21, indicating that its stock price is 21% more volatile than the S&P 500.

Earnings and Valuation

This table compares NetApp and Western Digital Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
NetApp $5.55 billion 2.00 $948.00 million $2.07 19.82
Western Digital Corporation $19.09 billion 1.35 $4.40 billion $1.28 69.16

Western Digital Corporation has higher revenue and earnings than NetApp. NetApp is trading at a lower price-to-earnings ratio than Western Digital Corporation, indicating that it is currently the more affordable of the two stocks.

Summary

Western Digital Corporation beats NetApp on 9 of the 17 factors compared between the two stocks.

About NetApp

NetApp, Inc. (NetApp) provides software, systems and services to manage and store customer data. The Company enables enterprises, service providers, governmental organizations, and partners to envision, deploy and evolve their information technology (IT) environments. The Company offers a portfolio of products and services that satisfy a range of customer workloads across different data types and deployment models. Its data management and storage offerings help manage business productivity, performance and profitability, while providing investment protection and asset utilization. The Company’s FlexPod portfolio includes FlexPod Datacenter for core enterprise data centers and service providers, FlexPod Express for medium-sized businesses and branch offices, and FlexPod Select for data-intensive workloads. The portfolio is validated with hypervisors, operating systems, systems management tools and cloud management platforms.

About Western Digital Corporation

Western Digital Corporation (Western Digital) is a developer, manufacturer and provider of data storage devices and solutions that address the needs of the information technology (IT) industry and the infrastructure that enables the proliferation of data in virtually every industry. The Company’s portfolio of offerings addresses three categories: Datacenter Devices and Solutions (capacity and performance enterprise hard disk drives (HDDs), enterprise solid state drives (SSDs), datacenter software and system solutions); Client Devices (mobile, desktop, gaming and digital video hard drives, client SSDs, embedded products and wafers), and Client Solutions (removable products, hard drive content solutions and flash content solutions). The Company develops and manufactures a portion of the recording heads and magnetic media used in its hard drive products.

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