Despite stagnant revenue growth, how has Seagate Technology stock outperformed the S&P since 2018?

Seagate Technology (NASDAQ: STX) the share price has more than doubled from $39 at the end of 2018 to over $80 currently, mainly due to the favorable development of its P/S multiple. During this period, the company saw only an 8% increase in revenue, but a substantial drop in the number of shares outstanding helped boost earnings per share and the stock price by the society. Additionally, over the same period, the S&P 500 has returned around 65%, meaning Seagate stock has managed to strongly outperform the broader markets.

In our interactive dashboard, Why Seagate Technology stock moved: STX stock has gained 109% since 2018we break down the factors driving this movement.

Seagate’s total revenue increased 7.7% from $11.2 billion in fiscal 2018 to $12 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 fiscal 2021 and currently stand at $12 billion on an LTM basis.
  • While Seagate presents its business under one operating segment, it is interesting to note that almost 50% of its sales come from Singapore, with the United States and the Netherlands making up the bulk of the remainder.
  • For more details on Seagate’s earnings and peer comparison, check out Seagate Technology Revenue Comparison

Earnings per share increased 43% from $38.79 in 2018 to $55.36 currently

  • Seagate’s revenue has fallen from $11.2 billion in 2018 to $12 billion currently, while the number of shares outstanding has shrunk at a rapid rate, from 288 million in 2018 to less than 220 million currently. .
  • Because of this, the RPS has gone from $38.79 in fiscal year 2018 to $55.36 currently.

Multiple Price-to-Sell (P/S) for Seagate Technology

STX
rose sharply from 0.7x in 2018 to 2.3x at the end of 2021, but is back to 1.5x currently, still more than 2x above its 2018 level

  • Seagate’s P/S multiple rose sharply to around 2.3x at the end of 2021, driven by 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 retreated, currently standing at around 1.5x.
  • For more details on the company’s stock returns and comparison with its peers, see Seagate Technology Stock Performance Comparison.

What if you were looking for a more balanced portfolio instead? Our quality portfolio and multi-strategy portfolio have consistently beaten the market since the end of 2016.

Invest with Trefis Wallets that beat the market

See everything Trefis Price estimates