Shares of Seagate Technology Public Limited Company (STX) hit a new 52-week high of $67.87 on Dec 2. This storage solutions provider eventually closed at $67.54, representing a one-year return of 38.9% and a year-to-date return of 25%. Average volume of shares traded over the last three months stood at over 2,949k.
Some of the optimism related to Seagate may be attributed to its focus on the enterprise segment, where technology upgrades and cloud-related investments are on the rise. Moreover, Seagate’s cloud-based applications have generated ample customer interest.
Furthermore, anticipating a potential acceleration in cloud deployments (due to exponential growth in data storage in the cloud), Seagate is investing heavily to deliver high-capacity storage devices that would support expansion of cloud infrastructure and cloud applications. We believe that this will boost margins and reduce Seagate’s dependence on the PC market.
Additionally, synergies from acquisitions and product innovations continue to drive growth. The company’s significant exposure to high-end corporate desktop and enterprise server markets is another positive. Nonetheless, competition from Western Digital Corp. (WDC) and SanDisk Corp. (SNDK) is a concern, going forward.
Seagate continues to reward shareholders with consistent dividends and share repurchases. In first-quarter fiscal 2015, the company spent $183 million for share repurchases and returned $140 million through dividend payments. Currently, Seagate pays a quarterly cash dividend of 54 cents per share which yields a solid 3.2% on an annualized basis, while it has a payout ratio of 38%.
Furthermore, in the last-reported quarter (first-quarter 2015), Seagate posted better-than-expected results wherein its top- and bottom-line figures beat the Zacks Consensus Estimate and improved year over year. The company’s results mainly benefited from a 6.8% year-over-year rise in shipments.
Currently, Seagate has a Zacks Rank #3 (Hold). A better-ranked stock worth considering in the storage device industry is Quantum Corporation (QTM) sporting a Zacks Rank #1 (Strong Buy).
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