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Western Digital Corporation (WDC) Intrinsic Value

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

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Western Digital Corporation (WDC)

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Intrinsic Value (DCF)

Current$222.10
→
Intrinsic$105.05
-53%
$67.58$105.05$179.55
Current price reflects execution expectations above 20% growth — not unreasonable for quality businesses.
Range: Bear $68 → Bull $180. 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: $180).
Discount ↓Growth →16%18%20%22%
8%$134$146$159$172
10%$89$97$105$114
12%$65$71$77$83
14%$50$54$59$64

Bull Case

  • Bull case ($180) with 24% growth, 8% discount rate

Bear Case

  • Bear case ($68) implies 70% downside at 16% growth, 12% discount
  • Trading 53% above base case — execution must exceed assumptions to justify
  • Price exceeds bull case ($180) — requires exceptional execution
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5-Year Free Cash Flow Projection

Year 1$1.54B
Year 2$1.85B
Year 3$2.22B
Year 4$2.66B
Year 5$3.20B
Terminal$50.63B

📐 Model Inputs

Growth Rate20.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$1.28BTTM 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 WDC stock undervalued or overvalued?
🔴 OVERVALUED

WDC trades at $222.10 vs. our DCF-derived intrinsic value of $105.05, implying -52% downside. Using a 9.5% WACC and 20.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($166.32) suggests limited upside.

What is WDC's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.28B, projected at 20.0% 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 $2.97B net debt and dividing by 0.36B shares: Bear $64.72 | Base $105.05 | Bull $166.32. Current price $222.10 implies -52% to base case.

How is WDC's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 20.0% 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 ($40.68B).

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: 31.7x.