Market Overview

Zacks Bull And Bear Of The Day: Western Digital And Bed Bath & Beyond

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Bull of the Day:

Headquartered in Irvine, CA, Western Digital Corporation (NASDAQ: WDC) is a leading provider of storage technologies and solutions. They are one of the largest hard disk drive (HDD) producers in the US. They design, develop, manufacture and market a broad range of HDDs, which are used in numerous consumer electronic devices.

With the acquisition of SanDisk, the company has ventured into the flash drive storage technology space.

Better-than-expected Results

On January 25, WDC reported results for their second fiscal quarter ended Dec. 29, 2017, beating on both the top and bottom lines.  

Non-GAAP earnings of $3.95 per share, were ahead of the Zacks Consensus Estimate by 14 cents and up 71.7% year-over-year. Revenues jumped 9.2% year-over-year thanks to strong demand in the company's end-markets.

"We continued our strong financial performance in the December quarter, with nine percent year-over-year revenue growth, driven by each of our major end market categories and solid execution by our team," said the CEO.

"We once again generated strong operating cash flow, reflecting continued healthy demand in our end markets, most notably for our capacity enterprise hard drives and flash-based products."

Rising Estimates

Analysts have been raising the estimates for the company after strong results. Zacks Consensus Estimates for the current and next year have surged to $13.98 per share and $12.33 per share, from $13.46 and $11.98 respectively, before the results. Rising estimates sent the stock back to a Zacks Rank #1 (Strong Buy).

Bear of the Day:

Founded in 1971, Bed Bath & Beyond (NASDAQ: BBBY) is an omnichannel retailer offering a wide selection of domestic merchandise and home furnishings.

As of Mar 3, 2018, the company operated 1,552 across 50 states, DC, Puerto Rico and Canada, including its namesake stores as well as stores under other names.

Lackluster Results and Guidance Reflect Rising Challenges

The company reported fourth-quarter fiscal 2017 results last week. While they beat our estimates on the top and bottom lines, comps declined due to the lower number of store transactions, which was somewhat offset by higher average transaction amounts.

Guidance was weaker than street estimates.

Shares plunged after the report.

Falling Estimates

Analysts have slashed their estimates for the company after weak guidance.  Zacks Consensus Estimates for the current and next fiscal year have fallen to $2.36 per share and $2.02 per share from $2.76 and $2.53 respectively, before the results.

Falling estimates sent the stock to a Zacks Rank #5 (Strong Sell).

Bottom Line

In addition to disappointing foot traffic in malls, the retail space is going through a shift toward online shopping, particularly from Amazon. With tightening labor markets, wage pressure has also started hurting retailers.

The stock is down about 19% year-to-date but a rebound any time soon does not appear likely.

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The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

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