Western Digital Beats Expectations and Provides OutlookBut Its Stock Still Falls

Western Digital Beats Expectations and Provides Outlook—But Its Stock Still Falls

$WDC (+6,52%) – The Western Digital Corporation reported earnings per share of $3.56 for the fourth quarter on Wednesday, beating analysts’ expectations of $3.29 by $0.27. The data storage manufacturer’s revenue for the quarter was $3.75 billion, also exceeding the consensus estimate of $3.69 billion.

The company’s revenue in the fourth fiscal quarter rose 44% compared to the same period last year. Adjusted earnings per share more than doubled year-over-year.

For the first quarter of fiscal year 2027, Western Digital forecasts earnings per share between $3.85 and $4.15, compared to the analyst consensus of $3.77. The company expects revenue in the range of $4.0 billion to $4.2 billion, while the consensus is $4.04 billion.

Based on the midpoint of the forecast, Western Digital anticipates first-quarter revenue of $4.1 billion and non-GAAP earnings per share of $4.00. For the quarter, the company expects a non-GAAP gross margin between 55% and 56%.

"WD closed fiscal year 2026 with a strong performance. In our fourth fiscal quarter, revenue increased 44% year-over-year, gross and operating margins expanded, and earnings per share more than doubled," said Irving Tan, CEO of WD.

Western Digital attributed the results to growing global demand for storage solutions, improved gross and operating margins, and operational discipline in end markets.

For the full fiscal year 2026, the company reported revenue of $12.92 billion, representing a 36% increase from the previous year. Diluted non-GAAP earnings per share reached $10.22, compared to $5.02 in fiscal year 2025.

The company’s board of directors announced a quarterly cash dividend of $0.15 per share, to be paid on September 17, 2026, to shareholders of record as of September 8, 2026.

Western Digital’s stock traded about 7.8% lower following the earnings report.

My take: I’ve come to find it just annoying that no matter how high you set the consensus—and even when you beat it—tech stocks get sold off right afterward and profits are taken. Yes, I can certainly understand wanting to lock in profits, but the outlook is stable, so I often find these reactions simply exaggerated. Well, just my two cents.

Source: investing.com

Yoshika 🦋.@Yoshika

2Mes

Revenue was only at the upper end of the company’s own guidance, with Exabytes up 22% compared to 34% year-over-year. The 44% increase in revenue came from price, not volume.
And after a 580% 12-month stock price gain, beating consensus just isn’t enough.

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@Yoshika
On top of that, the guidance calls for a gross margin of 55–56%, up from 54.4% in Q4. So that’s a one-percentage-point increase—after a nearly four-percentage-point rise last quarter 🤷🏻‍♀️

jkb92@jkb92

@Yoshika Exactly. I really don't understand why people are surprised that a stock drops after earnings when it's just had such a massive rally leading up to them.

Daniel Kaufmann@Wollitz

@Yoshika Well, what do investors expect—that the margin will go up by 4% every quarter? That’s just a pipe dream; there’s been improvement, even if only in small steps. It’s not like you can just slap on a 5% margin increase out of the blue without putting in any real effort. @jkb92 I’m not surprised by the decline in general, but by how steep it is. I just don’t think -14% is justified. Everyone’s entitled to their own opinion—that’s just how I see it 😉

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@Wollitz
I'm not expecting those 4 points at all. I'm evaluating the stock price, not the company. After a 580% gain, there's simply more factored into the price than just one point.

@Yoshika I’d agree with that. A lot of valuations have just skyrocketed too much, and that’s what ends up happening. Of course, I’ve made a very good profit myself because of it, but I still get annoyed by it time and time again. :-) But that’s probably just how it is these days—reactions tend to be a bit more extreme. Unfortunately, I don’t have any experience with this from the distant past. Well, maybe I just need to learn to take it a little more calmly and view it more objectively.