Buffett Brain · Research note
Score updated 27 Oct 2026 · analysis from 2 Jun 2026
WDC· Technology
Western Digital
Western Digital makes hard drives in a brutal commodity cycle, and at an owner-earnings yield of 0.7 percent the price assumes a boom that may not last.
Buffett fit
Partial fit
Owner
39
Durability
23
Management
38
Price
15
Score updated 27 Oct 2026 · analysis from 2 Jun 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Technology stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned all of Western Digital, I would notice that for every dollar of reported profit, only 69 cents shows up as , and the owner-earnings yield at this price is a mere 0.7 percent.
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The durability score of 23 is the heart of the problem. Five-year is just 3.4 percent, which means that across a full cycle this business has barely earned its cost of capital, even though the trailing figure of 27.9 percent flatters the present moment.
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Management earns a 38. The share count has crept up about 3.3 percent a year, so owners are being diluted rather than bought out, and the market capitalization sits below cumulative retained earnings, which says reinvested profits have not created a dollar of value per dollar kept.
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There is no here, there is a margin of danger. A of 28 and an EV/ of 78 on peak-cycle earnings, paired with an owner-earnings yield of 0.7 percent, means you are paying a premium price for a commodity at the top of its cycle.
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- The full reasoning behind all four pillars
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
6- 1Trailing of 31 percent and of 45 percent show the business prints real money when the storage cycle is favorable.
- 2Balance sheet is conservative, with of just 0.18 and net debt to EBITDA slightly negative at -0.06, so the company is essentially net cash.
- 3Interest coverage of 16 times means the modest debt load poses little risk of financial distress.
- 4Trailing of 27.9 percent demonstrates the high returns available at the peak of the cycle.
Concerns
7- 1Valuation is the first and largest problem: an owner-earnings yield of 0.7 percent, a of 28 and an EV/ of 78 mean you are paying a steep price for peak-cycle profits.
- 2Five-year of just 3.4 percent shows that across a full cycle this business barely earns its cost of capital, far below the trailing 27.9 percent.
- 3Revenue has declined at 13.4 percent a year, confirming the deep, recurring troughs of a commodity storage business.
- 4Earnings are fragile, with a worst-case historical decline of more than 200 percent, so today's profits offer no assurance about tomorrow's.
Price history
$356+801.4%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Western Digital sells data storage, mostly hard disk drives and flash memory, into PCs, data centers and consumer devices. The trailing of 45 percent and of 31 percent look handsome today, but this is a feast-or-famine industry where a 13.4 percent revenue decline over the cycle tells you the troughs are deep. The money is made when the cycle is hot and given back when it turns.
How this analysis has moved
Oct 27, 2026: Probably Not to Unclear
Sep 27, 2026 → Oct 27, 2026
What other investors would say
The same company, judged by three other documented playbooks.
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