Analyzing TDK (OTCMKTS:TTDKY) and Western Digital (NASDAQ:WDC)

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

Risk & Volatility

TDK has a beta of 1.31, meaning that its stock price is 31% more volatile than the S&P 500. Comparatively, Western Digital has a beta of 2.13, meaning that its stock price is 113% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for TDK and Western Digital, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TDK	0	1	0	1	3.00
Western Digital	0	5	18	2	2.88

Western Digital has a consensus price target of $534.56, indicating a potential upside of 21.06%. Given Western Digital’s higher possible upside, analysts clearly believe Western Digital is more favorable than TDK.

Dividends

TDK pays an annual dividend of $0.16 per share and has a dividend yield of 0.9%. Western Digital pays an annual dividend of $0.60 per share and has a dividend yield of 0.1%. TDK pays out 23.5% of its earnings in the form of a dividend. Western Digital pays out 2.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Insider & Institutional Ownership

92.5% of Western Digital shares are held by institutional investors. 0.0% of TDK shares are held by company insiders. Comparatively, 0.2% of Western Digital shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares TDK and Western Digital”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TDK	$16.64 billion	2.13	$1.29 billion	$0.68	26.78
Western Digital	$12.92 billion	11.78	$9.42 billion	$24.21	18.24

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
TDK	7.87%	9.15%	4.48%
Western Digital	72.95%	48.15%	25.79%

Summary

Western Digital beats TDK on 13 of the 17 factors compared between the two stocks.

About TDK

TDK Corporation, together with its subsidiaries, engages in manufacture and sale of electronic components in Japan, Europe, China, Asia, the Americas, and internationally. The company operates through Passive Components, Sensor Application Products, Magnetic Application Products, Energy Application Products, and Other segments. The Passive Components segment offers ceramic capacitors, aluminum electrolytic capacitors, film capacitors, high-frequency components, piezoelectric materials, and circuit protection components, as well as inductive devices, including ferrite cores, coils, and transformers. The Sensor Application Products segment provides temperature and pressure, magnetic, and MEMS sensors. The Magnetic Application Products segment offers hard disk drives (HDD) heads, HDD suspension assemblies, and magnets. The Energy Application Products segment provides energy devices comprising rechargeable batteries, and power supplies. The Other segment provides mechatronics production equipment and camera module micro actuators for smartphones and other products. The company also engages in engages in insurance and real estate agency businesses. The company was formerly known as Tokyo Denki Kagaku Kogyo K.K. and changed its name to TDK Corporation in 1983. TDK Corporation was founded in 1935 and is headquartered in Tokyo, Japan.

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.