DCF Studio

    SNDK · NMS · Technology

    Sandisk Corporation

    Also onConsensus Drift

    Implied value per share

    USD 864.42

    Market price

    USD 1791.82

    Implied upside

    -51.8%

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

    Current EV/EBITDA of 20.4x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 864.42-51.8%
    Exit multiple
    USD 1907.45+6.5%
    Market price
    USD 1791.82

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn4bn7bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueUSD 30.2bnUSD 45.1bnUSD 67.4bnUSD 100.6bnUSD 150.1bn+49.3%
    EBITUSD 3.1bnUSD 4.6bnUSD 6.8bnUSD 10.2bnUSD 15.2bn+49.3%
    NOPATUSD 2.7bnUSD 4.0bnUSD 6.0bnUSD 8.9bnUSD 13.4bn+49.3%
    Add depreciation & amortisationUSD 1.0bnUSD 1.5bnUSD 2.3bnUSD 3.4bnUSD 5.1bn+49.3%
    Less capital expenditureUSD -735.9mUSD -1.1bnUSD -1.6bnUSD -2.4bnUSD -3.7bn+49.3%
    Less increase in working capitalUSD -1.5bnUSD -2.2bnUSD -3.3bnUSD -4.9bnUSD -7.4bn+49.3%
    Free cashflow to firmUSD 1.5bnUSD 2.2bnUSD 3.3bnUSD 5.0bnUSD 7.5bn+49.3%
    Discount factor0.95130.86100.77920.70520.6382-
    Present valueUSD 1.4bnUSD 1.9bnUSD 2.6bnUSD 3.5bnUSD 4.8bn+35.1%
    Present Value Of The ForecastUSD 14.2bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.000As reported
    Cost of equity10.50%Risk-free + beta x equity risk premium
    Cost of debt6.58%Interest expense / average total debt
    Market capitalisationUSD 262.4bn99.9% of capital
    Total debtUSD 177.0m0.1% of capital, book value as a proxy
    Tax rate12.2%Effective, capped at statutory
    WACC10.49%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 864.42

    88% of EV

    Forecast FCFF, final year
    USD 7.5bn
    Capex at depreciation, working capital in reinvestment
    USD 14.1bn
    Less reinvestment at g/ROIC (6.8% of NOPAT)
    USD -956.4m
    Capitalised
    USD 13.1bn
    ROIC (reported)
    36.8%
    Terminal value, undiscounted
    USD 168.3bn
    Terminal value, discounted
    USD 107.4bn
    Enterprise value
    USD 121.6bn
    Less net debt
    USD -4.6bn
    Equity value
    USD 126.2bn

    Exit at 20.0x EBITDA

    Value per shareUSD 1907.45

    95% of EV

    Terminal value, undiscounted
    USD 406.9bn
    Terminal value, discounted
    USD 259.7bn
    Enterprise value
    USD 273.9bn
    Less net debt
    USD -4.6bn
    Equity value
    USD 278.5bn

    Spread between methods: 75%.

    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%
    8.49%1064.701126.991199.511285.071387.57
    9.49%912.55956.891007.451065.661133.44
    10.49%795.14827.79864.42905.82953.03
    11.49%702.00726.68754.01784.47818.64
    12.49%626.47645.52666.40689.40714.87

    Outlined: this model. Green text: above today's price of 1791.82. 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 year49.3%75.2%+25.9pp
    EBIT margin10.1%20.9%+10.8pp
    Discount rate10.5%6.7%-3.8pp
    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.