Free Trial

Seagate Advances 8% In October On Better-Than-Expected Q1 Results

Seagate Advances 8% In October On Better-Than-Expected Q1 Results
If you recall the days before cloud storage was ubiquitous, the name Seagate Technology Holdings NASDAQ: STX may ring a bell.

Even though you may not have an external hard drive connected to your laptop anymore, demand for cloud storage is driving growth at Seagate.

The Ireland-based maker of hard disk drives has been consolidating below its May 17 high of $106.22. 

So far, the stock is up 8.68% in October, thanks to rebounding in the weeks ended October 15 and 22.

Shares climbed 1.29% in the past month, as the stock appears it may be shaping the right side of the current base. 

The stock advanced 6.39% last week in volume 30% higher than normal. On October 22, the company reported fiscal first-quarter results that topped Wall Street views.

Seagate earned $2.35 per share, ahead of expectations for your $2.21 per share. That was a 153% year-over-year increase.

Revenue was $3.115 billion, up 35%. Analysts had expected $3.10 billion, according to MarketBeat data.

Other highlights from the quarter include:

  • GAAP operating margin of 18.8%; non-GAAP operating margin of 20.1%
  • GAAP diluted earnings per share (EPS) of $2.28; non-GAAP diluted EPS of $2.35
  • Raised the quarterly cash dividend for third consecutive year to $0.70 per share
  • Cash flow from operations of $496 million and free cash flow of $379 million

In a statement, CEO David Mosley addressed strength from the cloud storage and video and imaging markets.

He said ongoing demand from cloud data center customers, and strength in the video and image applications markets contributed to the strong revenue.

“Long-term, secular demand for mass capacity storage underpins our multi-year financial growth targets," he added. "Seagate’s innovative technology roadmap and operational agility position the company well to capture these growing opportunities and continue generating robust free cash flow to deliver value for customers and shareholders.”

In the earnings conference call, he elaborated on the strength of the "mass capacity" market, which includes enterprise customers.

"High capacity HDDs play a crucial role in helping businesses economically manage and extract value from an ever-increasing growth in data across the more distributed enterprise. Without question, the HDD industry is being driven by long-term secular demand for mass capacity storage, a market that we expect to more than double by calendar 2026 to $26 billion, and Seagate is well equipped to answer the call," Mosley said.

For the full year of fiscal 2022, Wall Street pegs Seagate's earnings at $8.88 per share, up 57%. For fiscal 2023, that's seen growing another 5% to $9.32 per share.

Of course, for any electronics company, the well-documented chip shortage may play a role in near- to medium-term growth. Other supply-chain bottlenecks, including shipping, are also impacting all manner of businesses.

"We are seeing a confluence of factors creating inflationary pressures and acute supply chain disruption," Mosley said." These include semiconductor component shortages and freight logistics challenges that are creating cost pressures and impacting critical end-product assemblies for certain customers. Notwithstanding these obstacles, underlying demand remained solid for Seagate's products, particularly in the mass capacity market, which is why we maintain a high level of confidence in our fiscal year growth outlook."

The company issued second-quarter guidance, based on current assumptions and expectations.

  • Revenue of $3.1 billion, plus or minus $150 million
  • Non-GAAP diluted EPS of $2.35, plus or minus $0.15

On Tuesday, Seagate announced a collaboration with LucasFilm on a line of Star Wars-themed Beskar Ingot Drives. According to Seagate, this product is "the first release in a collaboration to bring designs inspired by the Star Wars franchise to its line of PC gaming storage devices, taking gamers’ battle stations to the next level."

Despite the somewhat lengthy consolidation, Seagate still boasts a year-to-date gain of 44.85%, mostly due to gains for five months in a row, from January through May. 

At this juncture, it's too early to call a new rally in the stock, as it has a long way to go before regaining previous price highs.

However, if the upside trade continues near its current trajectory, it's possible that a long-term trend line may reveal an early buy point at around $95.
Seagate Advances 8% In October On Better-Than-Expected Q1 Results

Should you invest $1,000 in Seagate Technology right now?

Before you consider Seagate Technology, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Seagate Technology wasn't on the list.

While Seagate Technology currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Metaverse Stocks And Why You Can't Ignore Them Cover

Thinking about investing in Meta, Roblox, or Unity? Click the link to learn what streetwise investors need to know about the metaverse and public markets before making an investment.

Get This Free Report
Kate Stalter
About The Author

Kate Stalter

Contributing Author

Retirement, Asset Allocation, and Tax Strategies

Like this article? Share it with a colleague.

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Seagate Technology (STX)
4.7677 of 5 stars
$87.31-0.3%3.30%22.80Hold$118.83
Compare These Stocks  Add These Stocks to My Watchlist 


Featured Articles and Offers

Recent Videos

From Landfills to Profits: Opal Fuels CEO Shares How the Company Turns Trash into Cash
The Real Reason Tesla Stock Is Soaring – and Why Tech Expert Says It Won’t Stop
Best ETFs for 2025: Growth, Stability, and AI-Driven Investing

Stock Lists

All Stock Lists

Investing Tools

Calendars and Tools

Search Headlines