Western Digital Approves $2B Share Buyback to Boost Stockholder Value

Western Digital Corporation WDC has taken a significant step forward in enhancing shareholder value with the announcement of a new $2 billion share repurchase program. This initiative reflects the company's robust strategic capital allocation framework aimed at maximizing long-term investor returns. Western Digital seeks to capitalize on market opportunities while bolstering shareholder confidence in its financial health by utilizing various avenues such as open market transactions, private deals or under a Rule 10b5-1 trading plan.

This move underscores Western Digital's steadfast commitment to a balanced capital allocation strategy. Emphasizing growth reinvestment, debt reduction and substantial shareholder returns through buybacks, the company aligns its financial priorities with sustainable growth objectives. The decision to initiate this repurchase program shortly after introducing quarterly dividends further reinforces management's proactive approach to delivering value amidst evolving market conditions.

Western Digital Corporation Price and Consensus

Western Digital Corporation price-consensus-chart | Western Digital Corporation Quote

The timing and volume of the repurchases will be determined based on prevailing market conditions and company considerations. Western Digital also noted that it reserves the right to modify, suspend, or discontinue the program at any time.

On April 29, 2025, the company’s board of directors approved the initiation of a quarterly cash dividend program, starting with the quarter ending June 27, 2025. As part of this program, a cash dividend of 10 cents per share on the company’s common stock was declared, payable on June 18, 2025, to shareholders of record as of June 4, 2025.

A share repurchase program allows a company to buy back its own shares, reducing the number of outstanding shares and boosting earnings per share (EPS). This often signals management’s confidence in the company’s future and can enhance shareholder value. Buybacks are also a tax-efficient alternative to dividends and provide flexibility in capital allocation. By timing repurchases strategically, companies can improve financial ratios like return on equity (ROE), support the stock price and reduce ownership dilution.

Recently, the company came up with third-quarter fiscal 2025 results. Western Digital generated $508 million in cash from operations in the third quarter compared with $58 million in the prior-year quarter. Free cash flow amounted to $436 million, up 379% year over year.

As of March 28, 2025, cash and cash equivalents were $3.477 billion compared with $2.291 billion as of Dec. 27, 2024.

WDC’s Zacks Rank & Stock Price Performance

Western Digital currently carries a Zacks Rank #5 (Strong Sell). Shares of the company have lost 31% in the past year compared with the Zacks Computer- Storage Devices industry's decline of 31.5%. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Stocks to Consider From the Computer and Technology Space

Some better-ranked stocks from the broader technology space are Science Applications International Corporation SAIC, SAP SAP and Teradata Corporation TDC. SAIC, SAP and TDC carry a Zacks Rank #2 (Buy).

Science Applications’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing in one, with the average surprise being 14.62%. In the last reported quarter, SAIC delivered an earnings surprise of 28.5%. Its shares have increased 1.6% in the past year.

SAP’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 10.14%. In the last reported quarter, SAP delivered an earnings surprise of 8.63%. The company’s long-term earnings growth rate is 10.2%. Its shares have surged 52.7% in the past year.

Teradata’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 24.63%. In the last reported quarter, TDC delivered an earnings surprise of 15.79%. Its shares have decreased 31.1% in the past year.

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This article originally published on Zacks Investment Research (zacks.com).

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