Seagate Technologies (STX) Stock Analysis

 

Now seems to be a pretty good time to perform a stock analysis as we approach the middle of the month!  We have had ups and downs within the Market and it really can’t decide which way it truly wants to go.  With interest rates remaining on hold (thanks Fed… – was really hoping for a bigger discount, kidding!), the market has been a tick upwards over the last 1-2 weeks.  I wanted to hop into a sector and stock that has been beaten down this year with what is perceived to be sound dividend metrics.   How about the technology sector? Seagate Technologies (STX) – you are up!seagate

The Stock – seagate Technologies (STX)

Seagate Technologies (STX) – Per google finance: “Seagate Technology plc (Seagate) is a provider of electronic data storage products. The Company’s products are hard disk drives (HDD). The Company produces a range of electronic data storage products, including solid state hybrid drives (SSHD), solid state drives (SSD), peripheral component interconnect express (PCIe) cards and Serial AT Attachment (SATA) controllers. The Company’s products are designed for enterprise servers and storage systems for applications, client compute applications and client non-compute applications. The Company’s product and solution portfolio for the enterprise data storage industry includes storage enclosures, integrated application platforms and high performance computing (HPC) data storage solutions. Its data storage services provide online backup, data protection and recovery solutions for small to medium-sized businesses. Its products include Enterprise Performance HDDs, Mobile HDDs and SSHDs, NAS HDDs, and Surveillance HDDs, among others.”  They are headquartered in Dublin, Ireland and are massive in the data storage arena.  The main competitors would be Sandisk and Western Digiltal Corp.  At $15B in market capital – they are in between the two competitors and offer some very valid metrics when looking at it from a dividend stock standpoint.  No, they aren’t a foundation stock, they definitely are far from an Emerson (EMR) (whom I have bought 3x) and do not even take a sniff at Bert’s 5 always buy stocks.  Definitely a different approach here.   

STX – Dividend Diplomat Screener Analysis

Well, as of this writing on 10/11/2015 – the stock is trading at $49.03.  Using the dividend diplomat stock screener, lets check the stats and against 2 competitors from Morningstar and Google:

Seagate analysis

  1. Price to Earnings – Forward earnings are looking to be $4.46 now based on the analysts for 2016 in June (when WDC also has it’s year end, with SNDK’s in December).   With the current price, this means the P/E is roughly 10.99 – under the S&P ratio and also is less than the 2 competitors listed above.  Undervalued, eh?  I like it, I like it.
  2. Dividend Yield – Current yield is at 4.41%; which my portfolio overall is currently at roughly 4% – 4.05%.  Just above my portfolio, which would help boost it overall if I make a purchase.  Also, it is yielding much higher than the other 2 competitors, currently.  Also – not much yield history for any of the 3 companies, as they are fairly young in their dividend history, but they are yielding much higher than their historical yield – one of the reasons why this downturn offers more yield for less of a price as I explained earlier last month.
  3. Payout Ratio – at 48.43% from my calculation – Not too bad – right in the middle, obviously higher than the other 3, but not much dividend history to go off of.  Analysts appear to be expecting lower earnings per share guidance for the current year ends they are in and then expecting higher earnings afterwards.  Again, still room for growth here.
  4. Dividend Growth Rate – As well all know, the power of the growth rate is real. Their isn’t that much DGR here, as WDC and STX have approximately a 3 year history and well, any of them show huge dividend increases, since most technology companies don’t have dividends or are recently introducing them – Microsoft (MSFT) during the mid 2000’s and then Apple Inc (AAPL) recently in the last few years.  They all get the nod here.
  5. Share Buy Back – See why this is big news for dividend investors ; STX has decreased their shares by 4.835% or 15M shares, huge and that will allow earnings per share growth and room to grow their dividend.

Conclusion on STX Stock Analysis

This is interesting.  Who would have thought Seagate Technologies (STX) to be that big of a company, to produce great dividend results and have the right characteristics that us dividend investors love?  The only thing that is missing is the “history” of dividend increases that we all come to see/want in a stock – but I think time will bode well.  There is a market for storage, especially as we all keep transferring devices so frequently, and wanting to save everything we have without going full “cloud” based.  No they weren’t on our September Watch List but I may have to keep an eye on them.  Bert may have to deploy more capital, given that he has cruised passed his $15K goal and may be interested in boosting that dividend income up.

What does everyone else think of STX right now?  Would you purchase at these levels?  Like where the market is going?  Any takers here?  Love the feedback and excited to hear back!  Thank you again for stopping by to check this out.

-Lanny

DISCLOSURE: I DO NOT RECOMMEND ANY DECISION TO THE READER OR ANY USER, PLEASE CONSULT YOUR OWN RESEARCH. THIS IS ACTUAL DATA, ANALYSIS, HOWEVER I BASE NO INVESTOR RECOMMENDATION.  THANK YOU FOR YOUR UNDERSTANDING.
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13 thoughts on “Seagate Technologies (STX) Stock Analysis

  1. Thanks for the write up guys. I don’t really have an opnion on Seagate unfortunately. I don’t know much about computer hardware, so I largely stay away from the sector. You guys paint an interesting picture though. I hope you’re enjoying the fall weather.

    Have a great week!
    -Bryan

    • IS,

      Thanks for coming by – I don’t know as much about computer hardware in terms of what the projections look like – cost cutting without a doubt. Thought it was different for sure and an “area” of technology not touched upon. Appreciate the stop by, as always surfer!

      -Lanny

  2. It has a nice yield but I don’t really like the future prospects. PC demand is shrinking and an increasingly large portion of the market is shifting towards SSDs (and perhaps soon to a newer technology). Seagate has some SSD plays here and there but has no major transition to SSDs going on, and it’s going to be interesting to see if they can pull this off and add enough value to the product to keep their dominant position in the storage market. They don’t have any NAND fabs so they are at a disadvantage versus a firm like Samsung, which is vertically integrated in the SSD market.

    • DC,

      I agree – haven’t dove fully into where they stand in the solid state drive market, but I know from a storage standpoint they are fairly strong and you can’t have a monopoly out there. What’s interesting is they offer cloud storage at 3TB+ on their website, which could be interesting. I’m holding tight for now.

      -Lanny

  3. I’m new to your site and I was wondering what kind of analysis do you after making an investment and under what conditions do you sell an investment? Do you ever trade out of a stock that gets too hot. I’ve had stocks in the past that went parabolic and then came crashing down. Do you ever take profits and then reinvest in a more reasonable priced stock?

    • Peter,

      We have an analysis called the Dividend Diplomat Stock Screener – it’s at the top of our blog on one of the “page” headings. I typically don’t sell an investment unless their business has completely changed or that truly shows signs of a bad company.

      I typically don’t buy hot stocks and instead usually end up buying boring stocks. Rarely take profits, because I buy for fundamentally strong cash flow. Make sense?

      -Lanny

  4. Hello Lanny and Bert,

    Our team recently acquired dividendmantra.com and we’re looking for experts in the investing niche to contribute to our blog. I came across dividenddiplomats.com and really like the content you’ve posted [and the way you’ve shared your financial journey with your audience in a personal, genuine way].

    Would you be interested in contributing a post to our blog at dividenemantra.com? We can provide something of value in return, such as a link back to your site. I think our audience would love to hear what you have to say!

    If this sounds good to you, please let us know and we can set up a time to discuss this further. Looking forward to hearing from you!

    All the best,

    Ethan Sturgill
    DividendMantra.com
    Website Manager

    • Hi Ethan,

      Thank you very much for reaching out to us. We appreciate the kind words and are honored that you like the content on our website. We are having a blast writing about our journey and sharing the ride/enjoying the successes of all of the other bloggers in the community. It is an amazing, close-knit group we have!

      We would absolutely be interested in contributing on your website. Please email us at dividenddiplomats@gmail.com about the post, what you would like us to write about, etc. and we will reply back as soon as we can. We will be looking for your email and will proceed as soon as we receive it. Thank you again for thinking of us and we are looking forward to working with you!

      -The Dividend Diplomats

  5. Technologies stock sometimes have a bad reputation, but I’m always interested into companies that offer both growth and dividend growth. I have a doubt about growth for STX though. I’m not sure if their technology is sustainable in the long run. I guess the next couple years will show if they can innovate or not.

    Nice analysis!

    Mike

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