Technology stock

What’s Behind Seagate Technology Stock’s Outperformance Against Broader Markets Since 2017?


Seagate Technology (NASDAQ: STX) the share price has increased by around 1.5x from $42 at the end of 2017 to around $64 currently, mainly due to the favorable evolution of its earnings per share and its P/ S. During this period, the company recorded only a 4% increase in revenue, but a substantial drop in the number of shares outstanding helped to increase the company’s earnings per share, and with an increase constant of the P/S multiple, the company’s share price rose. . Additionally, over the same period, the S&P 500 returned just under 50%, meaning Seagate stock managed to narrowly outperform the broader markets.

In our interactive dashboard, Why Seagate Technology Stock Moved: STX Stock Gained 52% Since 2017we break down the factors driving this movement.

(A) Total STX revenue increased 4.3% from $11.2 billion in fiscal 2018 to $11.7 billion on an LTM basis

  • Seagate’s total revenue initially fell from $11.2 billion in fiscal year 2018 to $10.5 billion in fiscal year 2020, as sales volume grew more slowly than growth. lower cost per bit of its memory products (Seagate’s fiscal year ends in June).
  • However, sales have gradually recovered to $10.7 billion in FY21, and are currently even higher at $11.7 billion in its most recent FY22.
  • While Seagate presents its business under one operating segment, it is interesting to note that around 45% of its sales come from Singapore, with the United States and the Netherlands making up the rest.
  • For details on Seagate’s EBITDA and peer comparison, see Seagate Technology (STX) EBITDA Comparison

(B) Earnings per share (EPS) increased over 40% from $38.79 in 2018 to $55.77 currently

  • Seagate’s revenue has fallen from $11.2 billion in 2018 to $11.7 billion currently, while the number of shares outstanding has shrunk at a rapid rate, from 288.3 million in 2018 to around 210 million currently.
  • Because of this, the RPS has gone from $38.79 in fiscal year 2018 to $55.77 currently.

(C) The price-to-sales (P/S) multiple for FFIV has increased from 0.8x in 2017 to 2.2x by the end of 2021, but remains well below 1.1x currently, still above its level from 2017

  • The STX P/S multiple rose to around 2.2x at the end of 2021, due to rising investor expectations for growth in demand for memory products.
  • However, due to ongoing geopolitical tensions and heightened economic uncertainty weighing on broader markets, the P/S multiple has fallen sharply, currently sitting much lower at around 1.1x.
  • For more details on the company’s stock returns and comparison with its peers, see Comparison of Seagate Technology (STX) stock returns.

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Return Sep 2022
MTD [1]
2022
YTD [1]
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Total [2]
Back STX -4% -43% 68%
S&P 500 return -1% -18% 75%
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[1] Cumulative monthly and cumulative annual as of 01/09/2022
[2] Cumulative total returns since the end of 2016

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