MeritValue

WESTERN DIGITAL CORP

WDCdata completeness 100%18 fiscal years on file
The thesis, from the filings

WESTERN DIGITAL CORP earns about 3% on invested capital, but has diluted owners by 16% over 5 years — worth asking whether the growth reaches owners. The applicable estimate puts fair value near $23.7 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$16.9B1$18.8B2$6.26B3$6.32B3$9.52B3
Net income$821M4$1.55B5−$1.68B6−$798M6$1.89B6
Operating cash flow$1.9B7$1.88B8−$408M9−$294M9$1.69B9
Capital expenditure$1.15B10$1.12B11$821M12$487M12$412M12
Free cash flow (derived)$752M7$758M8−$1.23B9−$781M9$1.28B9
Total debt$17.5B13$14B14$14.1B15$14.9B16$9.42B16
Cash & equivalents$3.37B17$2.33B18$2.02B19$1.55B20$2.11B20
Diluted shares309.0M316.0M318.0M326.0M359.0M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$147.94
your share of equity
Profit it earned you last year
$52.62
Free cash flow it threw off
$35.63
Debt you’d be carrying
$262.45

10 shares is a claim on $147.94 of net worth that earned you $52.62 and generated $35.63 of cash last year, against $262.45 of debt.

iii. Is this a good business?
Moat signal · return on invested capital
3% avg · 5y
FY21 4%FY22 7%FY23 -2%FY24 -2%FY25 9%

It earned an average 3% on invested capital over 5 years. Compare that to what it costs to fund the business.

seeing a moat in the numbers →
Management signal · capital allocation
+16% shares · 5y

Share count is up 16% over 5 years — owners have been diluted. Worth asking what they got for it. Total debt has fallen 46% — deleveraging.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0
DCF · Growth Exit 10Y
not applicable
3y-median FCF non-positive — growth-exit DCF not applicable (see EPV)
DCF · Growth Exit 5Y
not applicable
3y-median FCF non-positive — growth-exit DCF not applicable (see EPV)
Earnings Power Value
$23.7
assumptions (8)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • normalizedEarnings$821M
  • growthAssumed0.0%
Graham Number
$41.28
assumptions (1)
  • grahamMultiplier2250.0%

Different models answer different questions — which to trust when →

Sources — the receipts
  1. 10-K · period ending 2021-07-02 · accession 0000106040-23-000024 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2022-07-01 · accession 0000106040-24-000031 (RevenueFromContractWithCustomerExcludingAssessedTax)
  3. 10-K · period ending 2023-06-30 · accession 0000106040-25-000038 (RevenueFromContractWithCustomerExcludingAssessedTax)
  4. 10-K · period ending 2021-07-02 · accession 0000106040-23-000024 (NetIncomeLoss)
  5. 10-K · period ending 2022-07-01 · accession 0000106040-24-000031 (NetIncomeLoss)
  6. 10-K · period ending 2023-06-30 · accession 0000106040-25-000038 (NetIncomeLoss)
  7. 10-K · period ending 2021-07-02 · accession 0000106040-23-000024 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-07-01 · accession 0000106040-24-000031 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-06-30 · accession 0000106040-25-000038 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-07-02 · accession 0000106040-23-000024 (PaymentsToAcquirePropertyPlantAndEquipment)
  11. 10-K · period ending 2022-07-01 · accession 0000106040-24-000031 (PaymentsToAcquirePropertyPlantAndEquipment)
  12. 10-K · period ending 2023-06-30 · accession 0000106040-25-000038 (PaymentsToAcquirePropertyPlantAndEquipment)
  13. 10-K · period ending 2021-07-02 · accession 0000106040-22-000055 (LongTermDebtNoncurrent)
  14. 10-K · period ending 2022-07-01 · accession 0000106040-23-000024 (LongTermDebtNoncurrent)
  15. 10-K · period ending 2023-06-30 · accession 0000106040-24-000031 (LongTermDebtNoncurrent)
  16. 10-K · period ending 2024-06-28 · accession 0000106040-25-000038 (LongTermDebtNoncurrent)
  17. 10-K · period ending 2021-07-02 · accession 0000106040-22-000055 (CashAndCashEquivalentsAtCarryingValue)
  18. 10-K · period ending 2022-07-01 · accession 0000106040-23-000024 (CashAndCashEquivalentsAtCarryingValue)
  19. 10-K · period ending 2023-06-30 · accession 0000106040-24-000031 (CashAndCashEquivalentsAtCarryingValue)
  20. 10-K · period ending 2024-06-28 · accession 0000106040-25-000038 (CashAndCashEquivalentsAtCarryingValue)