DCF Studio

    STMPA.PA · PAR · Technology

    STMicroelectronics N.V.

    Also onConsensus Drift

    Implied value per share

    EUR 14.94

    Market price

    EUR 43.45

    Implied upside

    -65.6%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · USD model at 0.8704

    AdjustedReports in USD, trades in EUR. Modelled in USD, converted at the end.
    NoteRisk-free rate is an assumption: EUR assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    EUR 14.94-65.6%
    Exit multiple
    EUR 28.17-35.2%
    Market price
    EUR 43.45

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 10.6bnUSD 9.6bnUSD 8.6bnUSD 7.8bnUSD 7.0bn-9.9%
    EBITUSD 1.8bnUSD 1.6bnUSD 1.4bnUSD 1.3bnUSD 1.2bn-9.9%
    NOPATUSD 1.5bnUSD 1.4bnUSD 1.2bnUSD 1.1bnUSD 1.0bn-9.9%
    Add depreciation & amortisationUSD 1.2bnUSD 1.1bnUSD 983.0mUSD 885.8mUSD 798.2m-9.9%
    Less capital expenditureUSD -599.3mUSD -540.0mUSD -486.6mUSD -438.5mUSD -395.1m-9.9%
    Less increase in working capitalUSD -113.6mUSD -102.4mUSD -92.3mUSD -83.1mUSD -74.9m-9.9%
    Free cashflow to firmUSD 2.0bnUSD 1.8bnUSD 1.6bnUSD 1.5bnUSD 1.3bn-9.9%
    Discount factor0.95010.85770.77430.69900.6310-
    Present valueUSD 1.9bnUSD 1.6bnUSD 1.3bnUSD 1.0bnUSD 842.2m-18.7%
    Present Value Of The ForecastUSD 6.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.20%EUR assumption - no free live source available for this market (assumption)
    Equity risk premium6.00%Market assumption
    Beta1.344Reported 1.513, pulled toward 1.0 (Blume)
    Cost of equity11.26%Risk-free + beta x equity risk premium
    Cost of debt3.20%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 38.8bn94.3% of capital
    Total debtUSD 2.4bn5.7% of capital, book value as a proxy
    Tax rate14.1%Effective, capped at statutory
    WACC10.77%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 17.16

    50% of EV

    Forecast FCFF, final year
    USD 1.3bn
    Capex at depreciation, working capital in reinvestment
    USD 1.0bn
    Less reinvestment at g/ROIC (19.1% of NOPAT)
    USD -200.3m
    Capitalised
    USD 848.9m
    ROIC (reported)
    13.1%
    Terminal value, undiscounted
    USD 10.5bn
    Terminal value, discounted
    USD 6.6bn
    Enterprise value
    USD 13.3bn
    Less net debt
    USD -2.6bn
    Equity value
    USD 15.8bn

    Exit at 16.6x EBITDA

    Value per shareUSD 32.37

    76% of EV

    Terminal value, undiscounted
    USD 32.8bn
    Terminal value, discounted
    USD 20.7bn
    Enterprise value
    USD 27.3bn
    Less net debt
    USD -2.6bn
    Equity value
    USD 29.9bn

    Spread between methods: 61%.

    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%
    8.77%19.8720.1920.5420.9621.45
    9.77%18.2318.4218.6318.8719.14
    10.77%16.9217.0417.1617.3017.45
    11.77%15.8615.9316.0016.0716.15
    12.77%14.9915.0215.0515.0915.12

    Outlined: this model. Green text: above today's price of 49.93. 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 year-9.9%19.1%+29.0pp
    EBIT margin16.7%61.2%+44.5pp
    Discount rate10.8%4.5%-6.3pp
    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.