Stock Buy: Western Digital Corporation

Western Digital Corporation (WDC: 39.43 +0.79 +2.04%) is ridiculously cheap with a forward P/E of just 6.6. Not only that but the company continues to beat expectations, surprising on the Zacks Consensus Estimate an impressive 9 consecutive quarters.

Western Digital Beat Big for the 4th Quarter in a Row

On Jan 21, Western Digital, the maker of hard drives, reported fiscal second quarter 2010 results which surprised on the Zacks Consensus Estimate by 36.03%. The company has now surprised by an average of 107.28% the last four quarters.

Revenue jumped 44% to $2.6 billion from $1.8 billion in the year ago quarter. Hard drive shipments soared to 49.5 million units from 35.5 million units in the second quarter of fiscal 2009.

Cash is King

Cash continues to pile up as Western Digital generated a record $557 million in the quarter to bring the total cash and cash equivalents to $2.4 billion.

Like many technology companies, the company pays no dividend so it's unclear what plans are in store for the cash hoard. But it's a good problem to have in this credit tight economic environment.

Zacks Consensus Estimates Jump for 2010

Analysts continue to be bullish about fiscal 2010 and given the recent performance, how could they not be?

The third quarter Zacks Consensus Estimate climbed 41.3% to $1.54 per share in the last 60 days.

The full year Zacks Consensus soared $1.36 to $6.02 per share in the same time period. Analysts expect year over year earnings growth of 136.9%.

It is in 2011 where the analysts are showing some caution. The fiscal 2011 Zacks Consensus stands at just $6.08 per share, which is essentially almost flat compared with 2010. Stay tuned to see how these estimates shape up.

Value Fundamentals

Western Digital is a Zacks #1 Rank (strong buy) stock. Besides it's cheap P/E, the company also has an attractive price-to-book of 2.24. The five year average return on equity is a spectacular 33.06%.

Company Description

Western Digital manufactures hard drives for electronic devices, including PCs and netbooks.