What’s Behind Seagate Technology Stock’s Outperformance of the Wider Markets Since 2017?

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Seagate Technology (NASDAQ: STX) The stock price rose about 1.5x from $42 in 2017 to about $64 today, primarily due to favorable changes in revenue per share and P/S multiple. During this period, the company saw revenues rise only 4%, but a significant decrease in the number of shares outstanding helped increase the company’s revenue per share, and with a steady increase in the P/S multiple, the share price of the company increased. Furthermore, the S&P 500 returned just under 50% over the same period, meaning Seagate stocks managed to outperform the broader markets by a narrow margin.

In our interactive dashboard, Why Seagate Technology Stock Moves: STX shares are up 52% ​​since 2017we break down the factors behind this movement.

STX’s total revenue grew 4.3% from $11.2 billion in FY 2018 to $11.7 billion on an LTM basis

  • Seagate’s total revenue initially declined from $11.2 billion in FY ’18 to $10.5 billion in FY ’20, as sales volume grew more slowly than the decline in the cost per bit of its memory products (Seagate’s fiscal year ends in June).
  • However, sales gradually recovered to $10.7 billion in FY ’21, and currently stands even higher at $11.7 billion in its most recent FY ’22.
  • Although Seagate only reports its business under one operating segment, it is interesting to note that approximately 45% of its revenue comes from Singapore, with the United States and the Netherlands making up the remainder.
  • For more information on Seagate’s EBITDA and comparison with peers, see: Seagate Technology EBITDA Comparison

Revenue per share increased by more than 40% from $38.79 in 2018 to $55.77 currently

  • Seagate’s revenue increased from $11.2 billion in 2018 to $11.7 billion today, while the number of outstanding shares declined rapidly, from 288.3 million in 2018 to approximately 210 million today.
  • As a result, the RPS has risen from $38.79 in FY ’18 to $55.77 currently.

Price-to-Sales (P/S) multiple for FFIV rose from 0.8x in 2017 to 2.2x at the end of 2021, but is currently much lower at 1.1x, still above 2017 levels

  • The STX P/S multiple rose to about 2.2x at the end of 2021, reflecting rising investor expectations about 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 retreated sharply and is currently much lower at around 1.1x.
  • For more information on the company’s stock returns and peer comparison, see: Seagate Technology Stock Return Comparison.

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