Analyzing Western Digital (NASDAQ:WDC) and Super Micro Computer (NASDAQ:SMCI)

Super Micro Computer (NASDAQ:SMCI) and Western Digital (NASDAQ:WDC) are both large-cap computer and technology companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, risk, analyst recommendations, profitability, earnings, institutional ownership and valuation.

Earnings and Valuation

This table compares Super Micro Computer and Western Digital”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Super Micro Computer	$14.94 billion	1.81	$1.15 billion	$1.90	23.85
Western Digital	$13.00 billion	1.59	-$798.00 million	$5.28	11.23

Super Micro Computer has higher revenue and earnings than Western Digital. Western Digital is trading at a lower price-to-earnings ratio than Super Micro Computer, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Super Micro Computer and Western Digital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Super Micro Computer	5.61%	20.41%	11.86%
Western Digital	13.33%	20.58%	9.01%

Volatility & Risk

Super Micro Computer has a beta of 1.4, meaning that its stock price is 40% more volatile than the S&P 500. Comparatively, Western Digital has a beta of 1.49, meaning that its stock price is 49% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and target prices for Super Micro Computer and Western Digital, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Super Micro Computer	2	11	5	1	2.26
Western Digital	0	3	18	0	2.86

Super Micro Computer currently has a consensus price target of $45.63, indicating a potential upside of 0.67%. Western Digital has a consensus price target of $63.79, indicating a potential upside of 7.59%. Given Western Digital’s stronger consensus rating and higher possible upside, analysts clearly believe Western Digital is more favorable than Super Micro Computer.

Insider and Institutional Ownership

84.1% of Super Micro Computer shares are owned by institutional investors. Comparatively, 92.5% of Western Digital shares are owned by institutional investors. 17.6% of Super Micro Computer shares are owned by company insiders. Comparatively, 0.3% of Western Digital shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Western Digital beats Super Micro Computer on 8 of the 15 factors compared between the two stocks.

About Super Micro Computer

Super Micro Computer, Inc., together with its subsidiaries, develops and manufactures high performance server and storage solutions based on modular and open architecture in the United States, Europe, Asia, and internationally. Its solutions range from complete server, storage systems, modular blade servers, blades, workstations, full racks, networking devices, server sub-systems, server management software, and security software. The company provides application-optimized server solutions, rackmount and blade servers, storage, and subsystems and accessories; and server software management solutions, such as Server Management Suite, including Supermicro Server Manager, Supermicro Power Management software, Supermicro Update Manager, SuperCloud Composer, and SuperDoctor 5. In addition, it offers server subsystems and accessories comprising server boards, chassis, power supplies, and other accessories. Further, the company provides server and storage system integration, configuration, and software upgrade and update services; and technical documentation services, as well as identifies service requirements, creates and executes project plans, and conducts verification testing and technical documentation, and training services. Additionally, it offers help desk and on-site product support services for its server and storage systems; and customer support services, including ongoing maintenance and technical support for its products. The company provides its products to enterprise data centers, cloud computing, artificial intelligence, and 5G and edge computing markets. It sells its products through direct and indirect sales force, distributors, value-added resellers, system integrators, and original equipment manufacturers. The company was incorporated in 1993 and is headquartered in San Jose, California.

About Western Digital

Western Digital Corporation develops, manufactures, and sells data storage devices and solutions in the United States, China, Hong Kong, Europe, the Middle East, Africa, rest of Asia, and internationally. It offers client devices, including hard disk drives (HDDs) and solid state drives (SSDs) for desktop and notebook personal computers (PCs), gaming consoles, and set top boxes; and flash-based embedded storage products for mobile phones, tablets, notebook PCs, and other portable and wearable devices, as well as automotive, Internet of Things, industrial, and connected home applications. The company also provides enterprise HDDs; enterprise SSDs consisting of flash-based SSDs and software solutions for use in enterprise servers, online transactions, data analysis, and other enterprise applications; and data storage platforms. In addition, it offers external HDD storage products in mobile and desktop form; client portable SSDs; removable cards that are used in consumer devices comprising mobile phones, tablets, imaging systems, and cameras and smart video systems; universal serial bus flash drives for use in the computing and consumer markets; and wireless drive products used in-field backup of created content, as well as wireless streaming of high-definition movies, photos, music, and documents to tablets, smartphones, and PCs. The company sells its products under the Western Digital, SanDisk, and WD brands to original equipment manufacturers, distributors, dealers, resellers, and retailers. Western Digital Corporation was founded in 1970 and is headquartered in San Jose, California.