Western Digital Corporation (WDC)
Profitability ratios
Return on sales
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | |
|---|---|---|---|---|---|
| Gross profit margin | 38.78% | 22.65% | 15.32% | 31.26% | 26.72% |
| Operating profit margin | 22.57% | -2.44% | -10.43% | 12.72% | 7.21% |
| Pretax margin | 11.87% | -5.08% | -12.66% | 11.30% | 5.48% |
| Net profit margin | 17.26% | -6.14% | -13.85% | 8.23% | 4.85% |
The profitability ratios of Western Digital Corporation over the period from June 30, 2021, to June 30, 2025, reveal significant fluctuations with notable trends and turning points.
Starting with the gross profit margin, there was a steady increase from 26.72% in 2021 to a peak of 31.26% in 2022, indicating improved efficiency or product mix during that period. However, this upward trend reversed sharply by 2023, with the gross margin falling to 15.32%, reflecting potential declines in pricing power, increased cost of goods sold, or operational challenges. Subsequent periods saw some recovery, with the gross margin rising to 22.65% in 2024, and further improving to 38.78% projected for 2025. This pattern suggests periods of margin compression followed by periods of margin recovery.
Operating profit margins exhibit a similar pattern. They increased from 7.21% in 2021 to 12.72% in 2022, indicating improved operational efficiencies and profitability. Nonetheless, the margin deteriorated sharply in 2023, turning negative at -10.43%, which points to operational losses and possibly one-time charges, restructuring costs, or adverse market conditions. The margin further declined to -2.44% in 2024 before a substantial turnaround to 22.57% projected for 2025, aligning with the gross margin recovery and indicating significant operational improvements or cost efficiencies.
Pretax margins follow the same trend, rising from 5.48% in 2021 to 11.30% in 2022, then plunging to -12.66% in 2023. The negative pretax margin signifies that pre-tax profitability was severely impacted, potentially due to extraordinary expenses or impairments. Similar to other ratios, there is an expected partial recovery in 2024 with a pretax margin of -5.08%, and a return to positive territory at 11.87% in 2025, reflecting improved pretax earnings before taxes.
Net profit margins demonstrate the most pronounced swing. They increased from 4.85% in 2021 to 8.23% in 2022, before experiencing a dramatic decline to -13.85% in 2023, signifying net losses after accounting for all expenses, taxes, and non-operating items. The negative margin persisted through 2024, at -6.14%, but is expected to improve significantly in 2025 to 17.26%, illustrating a strong rebound in net profitability, possibly driven by operational improvements, restructuring, or market condition adjustments.
In summary, Western Digital's profitability ratios depict a period of robust profit generation in 2021 and 2022, followed by a downturn in 2023 characterized by losses at the operating, pretax, and net levels. The data suggests a potential turnaround starting in 2024, with margins improving, culminating in a significant positive profit margin projection for 2025. This pattern points to a company that experienced operational and financial difficulties but appears to be on a recovery trajectory with substantial improvements projected in the near future.
Return on investment
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 15.35% | -1.31% | -5.26% | 9.11% | 4.67% |
| Return on assets (ROA) | 11.73% | -3.30% | -6.98% | 5.89% | 3.14% |
| Return on total capital | 26.39% | -2.26% | -11.32% | 21.82% | 10.34% |
| Return on equity (ROE) | 29.66% | -7.38% | -15.73% | 12.65% | 7.66% |
The analysis of Western Digital Corporation’s profitability ratios over the indicated period reveals notable fluctuations, reflecting both improvements and setbacks in the company's ability to generate profit relative to its assets, capital, and equity.
Starting with the Operating Return on Assets (Operating ROA), the figures show a significant increase from 4.67% as of June 30, 2021, to 9.11% in 2022, indicating improved operational efficiency and profitability. However, a downturn occurred by June 30, 2023, with a negative value of -5.26%, suggesting operational challenges or losses during that fiscal period. Although there was some recovery in 2024 with a negative but less severe figure of -1.31%, a substantial rebound is observed in 2025, reaching 15.35%, denoting a strong resurgence in operational profitability.
The standard Return on Assets (ROA) follows a somewhat similar pattern. It increased from 3.14% in 2021, peaking at 5.89% in 2022, before declining sharply to -6.98% in 2023, indicating losses relative to total assets. The figure improved slightly in 2024 to -3.30%, yet the overall trend remains negative until the significant positive turnaround in 2025, when ROA reaches 11.73%, signaling a robust recovery in overall asset efficiency.
Regarding the Return on Total Capital, which assesses profitability relative to all sources of capital employed (debt and equity), a substantial rise from 10.34% in 2021 to 21.82% in 2022 suggests enhanced capital efficiency. However, a sharp reversal is evident in 2023 with a negative value of -11.32%, indicating losses that eliminated previous gains. The ratio improved marginally in 2024 at -2.26%, but only rebounded strongly in 2025 to 26.39%, indicating a commendable restoration of profitability relative to total capital employed.
Lastly, the Return on Equity (ROE), reflecting profitability attributable to shareholders' equity, increased from 7.66% in 2021 to 12.65% in 2022. Similar to other ratios, it experienced a significant decline in 2023 to -15.73%, then a slight negative value in 2024 at -7.38%. The most notable development occurs in 2025 when the ROE surges to 29.66%, demonstrating a strong return to profitability and enhanced value creation for shareholders.
In summary, Western Digital’s profitability ratios illustrate a cycle of improvement up to 2022, followed by notable declines in 2023 and 2024, likely due to operational or market challenges. The marked recovery in 2025 across all ratios indicates a significant rebound in profitability, aligning with a potential strategic or market shift that positively impacted the company’s financial performance.