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If You Invested $1000 in Seagate a Decade Ago, This is How Much It'd Be Worth Now logo 4/14/2021

For most investors, how much a stock's price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.

The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.

What if you'd invested in Seagate (STX) ten years ago? It may not have been easy to hold on to STX for all that time, but if you did, how much would your investment be worth today?

Seagate's Business In-Depth

With that in mind, let's take a look at Seagate's main business drivers.

Headquartered at Dublin, Ireland, Seagate is the second-largest manufacturer of hard disk drives (HDDs) in the U.S. HDDs are used as the primary medium for storing electronic information in systems ranging from desktop computers and consumer electronics to data centers delivering information over corporate networks and the Internet.

Seagate also develops other electronic data storage products such as SSD (solid state drive) and solid state hybrid drives (SSHD). The company has an industry-leading vertically-integrated operation with internal control over the majority of its key component suppliers.

The company’s HDD products are designed for mission critical and nearline applications in enterprise servers and storage systems; edge compute/clientcompute applications. SSD products mainly comprise serial attached SCSI (“SAS”) and Non-Volatile Memory Express (“NVMe”) SSDs. Cloud systems and solutions portfolio incorporates modular original equipment manufacturer (“OEM”) storage systems and scale-out storage servers.

Seagate reported revenues of $10.5 billion in fiscal 2020. The company offers its products under two heads — mass capacity storage and Legacy (which includes consumer electronics, desktop and laptop solutions). The company enhanced its position in SSDs with the acquisition of Samsung’s HDD operations and the French drive maker, LaCie. In fiscal 2020, the company shipped 442 exabytes of HDD storage capacity.

Seagate primarily sells to OEMs but supplements this with sales through distributors and retailers. Major OEM customers include Dell Inc., HP Inc, IBM and Oracle. Revenues from the OEMs accounted for 74% of fourth quarter fiscal 2020 revenues, Distributors brought in 14% and the remaining 12% came from Retailers.

The disk drive market is highly competitive and the company mainly competes with manufacturers of hard drives used in the enterprise, edge compute/client compute and edge non-compute/client non-compute applications and with other companies in the data storage industry that provide SSDs and NVMe add-in technology. Micron Technology, Western Digital Samsung Electronics and SK hynix are few of the major competitors of Seagate.

Bottom Line

While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in Seagate ten years ago, you're probably feeling pretty good about your investment today.

A $1000 investment made in April 2011 would be worth $4,867.92, or a 386.79% gain, as of April 14, 2021, according to our calculations. Investors should note that this return excludes dividends but includes price increases.

Compare this to the S&P 500's rally of 215.09% and gold's return of 13.64% over the same time frame.

Looking ahead, analysts are expecting more upside for STX.

Seagate is well positioned to gain from solid demand for 16 terabyte (TB) products along with 18 TB drives. The company expects recovery in enterprise markets to gather pace in 2021, which augurs well for its nearline and mission-critical drives. Rebounding video and image applications’ market as well as higher sale of consumer drives and uptick in PC shipments augur well. Seagate also expects increases in uptake of its mass capacity storage solutions in the cloud and edge computing verticals. Nevertheless, legacy segment is likely to bear the brunt of sluggish IT spending across small and medium enterprises, at least in the near term. Rising costs due to COVID-19 amid stiff competition in the disk drive market might limit margin expansion at least in the near term. Shares of the company have underperformed the industry in the past year.

The stock is up 5.97% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 2 higher, for fiscal 2021. The consensus estimate has moved up as well.


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