Seagate Technology Earnings Add Luster to Dividend Boost

Seagate Technology PLC (NASDAQ: STX) reported first-quarter fiscal 2015 results before U.S. markets opened Monday. The hard drive maker posted adjusted diluted earnings per share (EPS) of $1.34 on revenues of approximately $3.79 billion. In the same period a year ago, the company reported EPS of $1.29 on revenues of $3.49 billion. First-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $1.25 and $3.63 billion in revenues.

Adjusted net income totaled $453 million, down about 4.2% from $473 million in the year-ago quarter. On a GAAP basis, net income slipped from $427 million a year ago to $381 million.

The company’s CEO said:

We continue to improve our position in the evolving storage market by leveraging and investing in our core storage technology and expanding our product portfolio with Cloud systems and solutions and integrated flash technology. We remain confident in our cash flow generation and the opportunities ahead for Seagate as evidenced by our recently announced target annual dividend increase of 26% to $2.16.

Last week Seagate boosted its quarterly dividend to $0.54 payable to stockholders of record as of November 11. Seagate’s dividend yield is now 3.7%, more than double that of rival Western Digital Corp. (NASDAQ: WDC).

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During the first quarter, Seagate generated approximately $602 million in operating cash flow, paid cash dividends of $140 million and repurchased approximately 3 million ordinary shares for $183 million.

Gross margins reached 28.1% on a non-GAAP basis, down slightly from 28.5% in the same quarter last year.

Seagate did not provide any information on guidance in the press release, but said it would provide a second-quarter outlook at its conference call scheduled for 9:00 a.m. ET. The consensus estimate for second fiscal quarter EPS calls for $1.42 on revenue of $3.68 billion. The consensus estimate for full-year EPS is $5.33 on revenue of $14.31 billion

Western Digital is scheduled to report earnings Tuesday, and the consensus estimates call for EPS of $2.03 on revenues of $3.89 billion.

Seagate’s shares were up about 1.4% in premarket trading, at $59.15 in a 52-week range is $46.99 to $63.27. Thomson Reuters had a consensus analyst price target of around $65.00 before the report.

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