Head to Head Survey: Pure Storage (PSTG) versus Western Digital Corporation (WDC)

Pure Storage (NYSE: PSTG) and Western Digital Corporation (NASDAQ:WDC) are both mid-cap computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, analyst recommendations, valuation, institutional ownership, dividends and profitabiliy.

Profitability

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

Net Margins Return on Equity Return on Assets
Pure Storage -31.62% -44.04% -24.43%
Western Digital Corporation -1.32% 16.01% 5.81%

Analyst Ratings

This is a breakdown of recent recommendations for Pure Storage and Western Digital Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pure Storage 0 7 15 0 2.68
Western Digital Corporation 0 5 26 1 2.88

Pure Storage presently has a consensus price target of $15.68, suggesting a potential upside of 13.83%. Western Digital Corporation has a consensus price target of $102.72, suggesting a potential upside of 8.76%. Given Pure Storage’s higher possible upside, equities analysts plainly believe Pure Storage is more favorable than Western Digital Corporation.

Insider and Institutional Ownership

34.4% of Pure Storage shares are held by institutional investors. Comparatively, 82.3% of Western Digital Corporation shares are held by institutional investors. 41.5% of Pure Storage shares are held by company insiders. Comparatively, 0.5% of Western Digital Corporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk and Volatility

Pure Storage has a beta of 0.94, suggesting that its stock price is 6% less volatile than the S&P 500. Comparatively, Western Digital Corporation has a beta of 1.25, suggesting that its stock price is 25% more volatile than the S&P 500.

Dividends

Western Digital Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 2.1%. Pure Storage does not pay a dividend. Western Digital Corporation pays out -202.0% of its earnings in the form of a dividend.

Valuation & Earnings

This table compares Pure Storage and Western Digital Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Pure Storage $770.66 million 3.73 -$160.42 million ($1.22) -11.29
Western Digital Corporation $17.75 billion 1.55 $3.51 billion ($0.99) -95.39

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

Summary

Western Digital Corporation beats Pure Storage on 13 of the 16 factors compared between the two stocks.

Pure Storage Company Profile

Pure Storage, Inc. provides a data platform. The Company is focused on delivering software-defined all-flash solutions that are fast and cloud-capable for customers, enabling customers to put data to work for their businesses. Its data platform replaces storage systems designed for mechanical disk with all-flash systems optimized end-to-end for solid-state memory. Its business model replaces the forklift upgrade cycle with an Evergreen Storage model. Its primary offerings include its FlashArray and FlashBlade products, inclusive of its Purity Operating Environment (Purity OE) software, its Pure1 cloud-based software, and FlashStack, its joint converged infrastructure solution with Cisco. Its customers include large and mid-size organizations across a diverse set of industry verticals, including cloud-based software and service providers, consumer Web, education, energy, financial services, governments, healthcare, manufacturing, media, retail and telecommunications.

Western Digital Corporation Company Profile

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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