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

Dividends

Western Digital Corp pays an annual dividend of $2.00 per share and has a dividend yield of 2.5%. Pure Storage does not pay a dividend. Western Digital Corp 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 Pure Storage and Western Digital Corp’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 Corp 5.78% 10.01% 3.79%

Risk and Volatility

Pure Storage has a beta of 0.88, indicating that its stock price is 12% less volatile than the S&P 500. Comparatively, Western Digital Corp has a beta of 1.22, indicating that its stock price is 22% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for Pure Storage and Western Digital Corp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pure Storage 0 7 15 0 2.68
Western Digital Corp 0 5 28 1 2.88

Pure Storage currently has a consensus target price of $15.68, suggesting a potential upside of 21.98%. Western Digital Corp has a consensus target price of $105.66, suggesting a potential upside of 30.50%. Given Western Digital Corp’s stronger consensus rating and higher probable upside, analysts plainly believe Western Digital Corp is more favorable than Pure Storage.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Pure Storage $770.66 million 1.57 -$160.42 million ($1.22) -10.53
Western Digital Corp $19.09 billion 1.24 $4.40 billion $1.28 63.26

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

Institutional & Insider Ownership

34.5% of Pure Storage shares are owned by institutional investors. Comparatively, 82.4% of Western Digital Corp shares are owned by institutional investors. 41.5% of Pure Storage shares are owned by company insiders. Comparatively, 0.5% of Western Digital Corp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Western Digital Corp 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 Corp 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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