Western Digital Corp. (NASDAQ:WDC)

Gross Profit Margin

The gross profit margin exhibited a downward trend overall, declining from 37.32% in 2018 to 15.32% in 2023. After a significant drop between 2018 and 2019 to approximately 22.64%, it remained relatively stable around 22.59% in 2020. There was a moderate recovery in 2021 and 2022, reaching 31.26%, before experiencing a sharp decrease in 2023.

Operating Profit Margin

The operating profit margin showed considerable volatility throughout the period. It started strong at 17.52% in 2018, plummeted to 0.53% in 2019, and remained low at 2% in 2020. It then gradually improved, climbing to 7.21% in 2021 and 12.72% in 2022, before facing a substantial decline to -10.43% in 2023, indicating operating losses in the most recent year.

Net Profit Margin

Net profit margin trends mirrored those of the operating margin but with generally lower values. Beginning at a modest 3.27% in 2018, it turned negative in 2019 at -4.55%, followed by a slight improvement yet still negative at -1.49% in 2020. The margin recovered to positive territory in 2021 and 2022 with 4.85% and 7.98% respectively, but then declined sharply to -13.85% in 2023, highlighting a period of net losses.

Return on Equity (ROE)

ROE exhibited wide fluctuations, starting at 5.85% in 2018 and dropping to -7.56% in 2019. Despite some recovery in subsequent years, reaching 12.27% in 2022, it sharply declined to -14.55% in 2023. This negative return suggests the company experienced a significant erosion of shareholder value in the latest year.

Return on Assets (ROA)

The ROA followed a similar pattern to ROE and net profit margin. It declined from 2.31% in 2018 to -2.86% in 2019, hovered below zero in 2020, then recovered to 5.71% in 2022 before falling to -6.98% in 2023. This indicates reduced effectiveness in asset utilization to generate profits in the most recent fiscal year.

Gross Profit Trend

The gross profit exhibited a significant decline from 7,705 million USD in 2018 to 3,752 million USD in 2019. It then stabilized near this level in 2020, with a slight increase to 3,781 million USD. Following this, there was a gradual recovery to 4,521 million USD in 2021 and a further rise to 5,874 million USD in 2022. However, in 2023, gross profit dropped sharply to 1,887 million USD, representing a notable decrease from the previous year's peak.

Revenue Net Trend

Net revenue decreased markedly from 20,647 million USD in 2018 to 16,569 million USD in 2019. It remained relatively stable through 2020 and 2021, with minor fluctuations around the 16,700 million USD mark. Revenue increased to 18,793 million USD in 2022 but then declined significantly to 12,318 million USD in 2023.

Gross Profit Margin Analysis

The gross profit margin saw a steep decline from 37.32% in 2018 to 22.64% in 2019, followed by marginal stabilization around 22.59% in 2020. The margin improved gradually to 26.72% in 2021 and further to 31.26% in 2022. In 2023, the margin fell drastically to 15.32%, its lowest point over the six-year period.

Overall Observations

Both gross profit and net revenue experienced a sharp decline between 2018 and 2019, followed by a period of relative stabilization. The years 2021 and 2022 showed improvement in profitability and revenue, culminating in peak gross profit and margin in 2022. However, 2023 marked a significant downturn across all metrics, indicating challenges in maintaining previous profitability and revenue levels. The sharp decrease in gross profit margin in 2023 suggests increased costs or pricing pressures impacting profit efficiency.

Revenue, net

Over the period analyzed, net revenue exhibited a fluctuating trend. Starting at 20,647 million USD in 2018, it declined notably to 16,569 million USD in 2019. This was followed by a slight increase to 16,736 million USD in 2020 and a marginal growth to 16,922 million USD in 2021. A more substantial rise occurred in 2022, reaching 18,793 million USD, before a sharp decrease to 12,318 million USD in 2023. The latest revenue figure represents the lowest point since 2019, indicating potential challenges in maintaining sales levels in the most recent period.

Operating income (loss)

Operating income demonstrated significant volatility across the years. The value dropped steeply from 3,617 million USD in 2018 to a mere 87 million USD in 2019, indicating a considerable decline in operational profitability. There was a moderate recovery in 2020 to 335 million USD, followed by a strengthened position in 2021 with 1,220 million USD and further improvement to 2,391 million USD in 2022. However, in 2023, the company experienced a notable operational loss of 1,285 million USD, reversing the prior gains and reflecting substantial operational difficulties.

Operating profit margin

The operating profit margin experienced pronounced fluctuations throughout the periods. In 2018, the margin was robust at 17.52%. It drastically decreased to 0.53% in 2019, corresponding with the sharp drop in operating income despite relatively high revenues. Subsequent years saw a gradual recovery in margin to 2% in 2020, further increasing to 7.21% in 2021 and reaching 12.72% in 2022, indicating improved operational efficiency or cost management. Nevertheless, in 2023 the margin shifted dramatically to -10.43%, coinciding with the operating loss and reflecting negative profitability on operations.

Summary of trends and insights

The financial data reveals a highly variable operational performance over the examined six-year timeframe. Revenue showed an overall downward trend after peaking in 2018, with a brief rebound in 2022 followed by a steep decline in 2023. Operating income and operating profit margin mirrored similar volatility, with earnings plummeting in 2019 and again turning negative in 2023 after intermediate recoveries. The pronounced decline in 2023 suggests significant challenges affecting operational outcomes, possibly due to increased costs, market pressures, or other external factors impacting profitability. This volatility highlights the importance of addressing underlying issues to stabilize revenue streams and improve operational efficiencies.

Net Income (Loss)

Net income showed significant fluctuations over the periods analyzed. Initially, there was a positive net income of 675 million USD in 2018, followed by a sharp reversal to a loss of 754 million USD in 2019. The negative trend continued in 2020 with a smaller loss of 250 million USD. The company returned to profitability in 2021 and 2022, with net income figures of 821 million USD and 1,500 million USD respectively. However, in 2023, there was a substantial drop, resulting in a notable loss of 1,706 million USD.

Revenue, Net

Net revenue displayed a downward trend initially, decreasing from 20,647 million USD in 2018 to 16,569 million USD in 2019. Revenue remained relatively stable around the 16,700 million USD mark between 2019 and 2021. An increase occurred in 2022, reaching 18,793 million USD. Despite this growth, revenue declined sharply to 12,318 million USD in 2023, representing the lowest value within the six-year span.

Net Profit Margin

The net profit margin mirrored fluctuations observed in net income. The margin started positively at 3.27% in 2018, turned negative to -4.55% in 2019, and remained negative though less severe at -1.49% in 2020. Profitability improved in 2021 and 2022, with margins of 4.85% and 7.98% respectively. However, in 2023, the margin declined sharply to -13.85%, indicating significant profitability challenges in conjunction with reduced revenues and a substantial net loss.

The financial data reveals notable fluctuations in the company's profitability and return on equity (ROE) over the examined six-year period.

Net Income (Loss)

The net income figures demonstrate considerable volatility. In 2018, a positive net income of $675 million was recorded, which substantially dropped to a loss of $754 million in 2019. This negative trend persisted in 2020 with a smaller loss of $250 million, followed by a strong recovery to $821 million in 2021 and further growth to a peak of $1,500 million in 2022. However, in 2023, net income turned sharply negative again, with a loss amounting to $1,706 million.

Shareholders’ Equity

Shareholders' equity exhibited a declining trend from $11,531 million in 2018 to $9,551 million in 2020, indicating a reduction in net asset value during that period. Subsequently, equity improved steadily, reaching $12,221 million in 2022 before slightly contracting to $11,723 million in 2023.

Return on Equity (ROE)

ROE mirrored the profit trends closely. Initially positive at 5.85% in 2018, ROE fell into negative territory in 2019 (-7.56%) and 2020 (-2.62%), reflecting the net income losses. The metric recovered in the years 2021 (7.66%) and 2022 (12.27%), indicating stronger profitability relative to equity. Nonetheless, ROE turned negative again in 2023, dropping to -14.55%, which aligns with the substantial net loss reported for that year.

Overall, the data suggests periods of financial instability with alternating losses and gains, impacting both profitability measures and equity value. The most recent year shows significant deterioration, marked by a large net loss and sharply negative ROE, requiring careful management attention to address underlying challenges.

The financial data demonstrates significant fluctuations in profitability and asset utilization over the analyzed periods.

Net Income (Loss)

The net income figures reveal a volatile profitability trend. Initially, the company reported a positive net income of $675 million. This was followed by a substantial loss of $754 million in the subsequent year, and a smaller loss of $250 million the year after. The trend reversed with a return to profitability, posting $821 million and then an even higher net income of $1,500 million in the next two years. However, the latest period shows a sharp decline, resulting in a net loss of $1,706 million. This pattern suggests episodic challenges and recoveries affecting the company’s bottom line.

Total Assets

The total assets exhibit a gradual downward trend across the periods. Starting at $29,235 million, total assets decreased consistently to $24,429 million by the last period. This steady reduction indicates a contraction in asset base, which could be attributed to asset disposals, write-downs, or deliberate downsizing efforts.

Return on Assets (ROA)

ROA percentages correspond closely with the net income results, reflecting fluctuating efficiency in asset utilization. The initial positive ROA of 2.31% turned negative at -2.86% and slightly improved to -0.97%, before rising to a peak of 5.71% in the penultimate period. The final period shows a sharp reversal to -6.98%, indicating a significant deterioration in generating returns from assets.

Overall, the company’s financial performance is characterized by pronounced volatility in profitability and returns, coupled with a consistent reduction in total assets. The positive periods indicate capacity for recovery; however, the recent substantial losses and lowered returns highlight areas of concern that may require strategic adjustments.