WDC Value Scorecard - Western Digital

Value Scorecard · run 2026-10-18

13 value checks: 12 scored 1 to 5, plus moat evidence

43/60

moderate value score

Earnings & returns

EPS Trend

5/5

Diluted EPS: -$5.37 (2023), -$2.61 (2024), $5.12 (2025), $26.92 (2026). It rose every year; the framework scores that as 5.

ROE Trend

3/5

ROE (net income / common equity): -15.6% (2023), -7.9% (2024), 34.6% (2025), 104.8% (2026). Median 13.4%, lowest -15.6%; the framework scores a median 10-15% as 3.

ROIC

5/5

ROIC of 46.3%: operating income of $4.45B divided by $9.62B of capital (total assets $13.86B minus current liabilities $4.24B), fiscal year to Jul 3, 2026, as filed in the 10-K (SEC EDGAR). The framework scores above 20% as 5.

Profit Margins

5/5

Net margin of 72.9%; the framework scores above 20% as 5; gross margin 48.9%, operating margin 43.6%.

Balance sheet & cash

Debt-to-Equity

5/5

Net cash: total debt $1.19B, total cash $1.58B. The framework scores a net cash position as 5.

Free Cash Flow

5/5

Free cash flow (operating cash flow minus capital expenditure): -$1.23B (2023), -$781.00M (2024), $1.28B (2025), $3.51B (2026). It rose every year; the framework scores that as 5.

Retained Earnings

3/5

Retained earnings, as filed in the 10-Ks (SEC EDGAR): $7.57B (2023), $6.78B (2024), $762.00M (2025), $10.00B (2026). It ended above 2023 but did not rise in 2 of 3 years; the framework scores that as 3.

Valuation models

Graham IV

5/5

IV = EPS x (8.5 + 2g) x (4.4 / Y) = $26.92 x (8.5 + 2 x 5.0) x (4.4 / 4.5) = $486.95 (EPS CAGR unavailable, default 5% applied). Current price $332.00; price is 31.8% below the model value.

DCF Value

1/5

FCF/share = $6.061, stage 1 growth = 20.0% (revenue CAGR 43.0% capped at 20%) for 5 years, terminal growth = 3%, discount rate = 10%. Stage 1 PV = $39.64, PV of terminal value = $137.79, DCF value = $177.43. Current price $332.00; price is 87.1% above the model value.

Margin of Safety

3/5

Graham value $486.95 (price is 31.8% below the model value); DCF value $177.43 (price is 87.1% above the model value).

Price-to-Book

1/5

P/B of 13.52; the framework scores above 5.0 as 1.

Business quality

Moat Evidence

Not scored

A moat (a brand, a network, switching costs, patents, scale, a licence) is not a number in the filings, so Valerius doesn’t score it. Below are the figures and the words moat analysis starts from, from the company’s own 10-K filings. The conclusion is yours.

Return on capital, each year

Above 15% in 2 of 10 years (2017-2026); lowest -2.9%, highest 46.3%.

Gross margin, each year

Between 22.2% and 48.9% over 10 years (a range of 26.7 points).

Competition, in the company’s own words · 10-K filed Aug 14, 2026

We believe we are well-positioned in a competitive industry with our leading product portfolio, differentiated innovation engine, global manufacturing footprint, and leadership in driving areal density and cost efficiency. Nevertheless, we face strong competition from several manufacturers of storage products and storage systems and solutions, whether directly or indirectly. Our competitors include HDD competitors

The opening of the company’s “Competition” section in its 10-K, quoted word for word, not summarized or edited. It is the company’s own description, not Valerius’s view, and may include the company’s expectations. Open the filing.

Return on capital = operating income / (total assets − current liabilities), the ROIC row’s definition; 15% is the framework’s return threshold. Gross margin = gross profit / revenue. Both from each year’s 10-K via SEC EDGAR. Moat analysis commonly looks at whether returns and margins held up over many years. These figures don’t say whether the company has an advantage, what it is, or whether it will last.

Capital Allocation

2/5

Capital allocation, 2023-2026: dividends or buybacks paid in 3 of 4 years (fail); $2.97B paid out against $2.78B of free cash flow (fail: paid out more than free cash flow); total debt $7.07B to $1.05B, down 85.1%, 0.1x EBITDA (pass: not up more than 10%); shares outstanding 0.32B to 0.36B, up 12.1% (fail: up more than 2%). 1 of 4 tests passed; the framework scores that as 2.

Filings

Company notices to the SEC

Not scored

Three kinds of event the company reported to the SEC in the last 5 years, from its filings on SEC EDGAR.

These are events the company reported to the SEC. An auditor change or a late filing can have many causes; each date links to the filing, where the company explains it. Valerius does not score these.

How the Graham and DCF values were calculated

  Graham Formula:
    IV = EPS x (8.5 + 2g) x (4.4 / Y)
    EPS = $26.92, g = 5.0%, Y = 4.5
    IV = $486.95
    Current price $332.00 vs Graham value $486.95 — price is 31.8% below the model value.

  DCF:
    FCF/share = $6.061
    Stage 1 growth = 20.0% for 5 years | terminal growth = 3.0% | discount rate = 10.0%
    Stage 1 g capped at 20.0% (3-year revenue CAGR was 43.0%)
      Y1: $7.273 → PV $6.612
      Y2: $8.728 → PV $7.213
      Y3: $10.473 → PV $7.869
      Y4: $12.568 → PV $8.584
      Y5: $15.082 → PV $9.364
    Stage 1 PV sum = $39.64
    Terminal value at end of Y5 = $221.91
    PV of terminal value = $137.79
    DCF value = $177.43
    Current price $332.00 vs DCF value $177.43 — price is 87.1% above the model value.

Data from yfinance summary figures and financial statements, and from the company’s 10-K filings via SEC EDGAR; computed at a price of $332.00. Every score is calculated from the figures by the framework’s fixed rules, and the explanation beside it is generated from the same figures: Graham value, DCF value, margin of safety, ROIC, profit margins, debt-to-equity, price-to-book, EPS trend, ROE trend, free cash flow, retained earnings and capital allocation. No AI is involved in this scorecard. The moat is shown as evidence, without a score. Read each score with the figures beside it. Intrinsic value calculations are model outputs based on stated assumptions, not predictions.

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