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Seagate Technology Holdings plc (STX) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Seagate Technology Holdings plc (STX)

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Intrinsic Value (DCF)

Current$320.32
→
Intrinsic$67.47
-79%
$38.46$67.47$125.20
Current price reflects execution expectations above 12% growth — not unreasonable for quality businesses.
Range: Bear $38 → Bull $125. Current price implies expectations above the base case, closer to bull expectations.
Current price reflects assumptions at the upper end of our valuation range (bull case: $125).
Discount ↓Growth →8%10%12%14%
8%$88$98$108$119
10%$54$61$67$75
12%$36$41$46$51
14%$25$29$33$37

Bull Case

  • Bull case ($125) with 15% growth, 8% discount rate
  • Conservative 12% growth assumption is achievable based on track record

Bear Case

  • Bear case ($38) implies 88% downside at 10% growth, 12% discount
  • Trading 79% above base case — execution must exceed assumptions to justify
  • Price exceeds bull case ($125) — requires exceptional execution
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5-Year Free Cash Flow Projection

Year 1$918.64M
Year 2$1.03B
Year 3$1.16B
Year 4$1.30B
Year 5$1.46B
Terminal$23.15B

📐 Model Inputs

Growth Rate12.3%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$818.00MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is STX stock undervalued or overvalued?
🔴 OVERVALUED

STX trades at $320.32 vs. our DCF-derived intrinsic value of $67.47, implying -80% downside. Using a 9.5% WACC and 12.3% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($107.25) suggests limited upside.

What is STX's intrinsic value?

Using a 5-year DCF model: Base FCF of $818M, projected at 12.3% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $4.48B net debt and dividing by 0.22B shares: Bear $39.75 | Base $67.47 | Bull $107.25. Current price $320.32 implies -80% to base case.

How is STX's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 12.3% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($19.12B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 23.4x.