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SanDisk Corporation (SNDK) Posts Better than Expected Second Quarter of 2015 Earnings

Flash memory and software maker SanDisk Corporation (NASDAQ:SNDK) on Wednesday released its earnings for the second quarter, in a report that delivered a positive surprise. The company’s net income for the period amounted to $81 million, equivalent to $0.38 per share, beating analysts’ consensus estimate of $0.34 per share. On a year over year basis, however, the profit was down by 70.4%. The company also delivered revenues of $1.24 billion, also beating analysts’ forecast of $1.20 billion, although it represented a 24% decline on the year. Ahead of the earnings release, expectations were low on the stock, owing to challenges in sales of embedded parts used in the making of drives that deliver faster speeds and greater reliability compared to the traditional drives. Nevertheless, the report revealed a 39% rise in retail sales as a percentage of the company’s total revenue for the quarter, up from 33% a year ago. The company posted its first revenue drop in two years at the end of first quarter of 2015. With analysts expecting lackluster performance and the management having also forecasted a fall in revenue, going as far as laying down strategies to trim its non-factory workforce by 5%, the future seemed uncertain. Its latest earnings results are therefore a harbinger of a healthier third quarter.

data storage, sandisk

Over the past three months, insider trading surrounding SanDisk has not been very active, with a small number of open-market transactions, which is usually typical for large companies. However, what we tend to focus more is the hedge fund activity that a company witnesses.

At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read more details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 135% and beating the market by more than 55 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.

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