DCF Studio

    SMCI · NMS · Technology

    Super Micro Computer, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 81.23

    Market price

    USD 39.09

    Implied upside

    +107.8%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedReported capital expenditure averages just 0.58% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 1.00% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.
    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 1.0% of revenue against depreciation of 0.3%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 81.23+107.8%
    Exit multiple
    USD 118.78+203.9%
    Market price
    USD 39.09

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    -30088313123-150441565620FY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueUSD 58.6bnUSD 87.9bnUSD 131.8bnUSD 197.8bnUSD 296.6bn+50.0%
    EBITUSD 4.6bnUSD 6.9bnUSD 10.4bnUSD 15.6bnUSD 23.4bn+50.0%
    NOPATUSD 4.0bnUSD 6.0bnUSD 9.0bnUSD 13.4bnUSD 20.2bn+50.0%
    Add depreciation & amortisationUSD 182.3mUSD 273.5mUSD 410.3mUSD 615.4mUSD 923.1m+50.0%
    Less capital expenditureUSD -585.9mUSD -878.9mUSD -1.3bnUSD -2.0bnUSD -3.0bn+50.0%
    Less increase in working capitalUSD -9.5bnUSD -14.3bnUSD -21.4bnUSD -32.1bnUSD -48.2bn+50.0%
    Free cashflow to firmUSD -5.9bnUSD -8.9bnUSD -13.4bnUSD -20.1bnUSD -30.1bn-50.0%
    Discount factor0.94630.84750.75900.67980.6088-
    Present valueUSD -5.6bnUSD -7.6bnUSD -10.2bnUSD -13.6bnUSD -18.3bn-34.3%
    Present Value Of The ForecastUSD -55.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.667Reported 1.996, pulled toward 1.0 (Blume)
    Cost of equity14.17%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 25.7bn74.6% of capital
    Total debtUSD 8.8bn25.4% of capital, book value as a proxy
    Tax rate13.8%Effective, capped at statutory
    WACC11.66%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 81.23

    196% of EV

    Forecast FCFF, final year
    USD -30.1bn
    Capex at depreciation, working capital in reinvestment
    USD 20.5bn
    Less reinvestment at g/ROIC (19.0% of NOPAT)
    USD -3.9bn
    Capitalised
    USD 16.6bn
    ROIC (reported)
    13.2%
    Terminal value, undiscounted
    USD 185.9bn
    Terminal value, discounted
    USD 113.2bn
    Enterprise value
    USD 57.9bn
    Less net debt
    USD 1.2bn
    Equity value
    USD 56.6bn

    Exit at 9.4x EBITDA

    Value per shareUSD 118.78

    166% of EV

    Terminal value, undiscounted
    USD 228.9bn
    Terminal value, discounted
    USD 139.4bn
    Enterprise value
    USD 84.1bn
    Less net debt
    USD 1.2bn
    Equity value
    USD 82.8bn

    Spread between methods: 38%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    9.66%128.42133.69139.60146.28153.93
    10.66%99.74102.93106.41110.26114.55
    11.66%77.4179.2581.2383.3585.65
    12.66%59.6760.6461.6362.6763.74
    13.66%45.9346.5447.1447.7548.35

    Outlined: this model. Green text: above today's price of 39.09. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year50.0%12.9%-37.1pp
    EBIT margin7.9%6.3%-1.6pp
    Discount rate11.7%14.4%+2.7pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.