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    STX · NMS · Technology

    Seagate Technology Holdings plc

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 85.60

    Market price

    USD 858.79

    Implied upside

    -90.0%

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

    Wrong toolThis model values the shares at 10.0% of the market price. A gap that size is a modelling failure rather than a view - most often an unusable beta, a currency or units mismatch, or a cashflow base that does not represent the business. Read the figures below as diagnostics, not as a call.

    Current EV/EBITDA of 43.9x 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 85.60-90.0%
    Exit multiple
    USD 280.79-67.3%
    Market price
    USD 858.79

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueUSD 14.4bnUSD 17.0bnUSD 20.1bnUSD 23.8bnUSD 28.1bn+18.2%
    EBITUSD 2.3bnUSD 2.7bnUSD 3.2bnUSD 3.7bnUSD 4.4bn+18.2%
    NOPATUSD 2.0bnUSD 2.3bnUSD 2.7bnUSD 3.2bnUSD 3.8bn+18.2%
    Add depreciation & amortisationUSD 576.6mUSD 681.5mUSD 805.6mUSD 952.3mUSD 1.1bn+18.2%
    Less capital expenditureUSD -567.1mUSD -670.3mUSD -792.3mUSD -936.5mUSD -1.1bn+18.2%
    Less increase in working capitalUSD -841.4mUSD -994.6mUSD -1.2bnUSD -1.4bnUSD -1.6bn+18.2%
    Free cashflow to firmUSD 1.1bnUSD 1.3bnUSD 1.6bnUSD 1.9bnUSD 2.2bn+18.2%
    Discount factor0.93520.81810.71550.62590.5475-
    Present valueUSD 1.1bnUSD 1.1bnUSD 1.1bnUSD 1.2bnUSD 1.2bn+3.4%
    Present Value Of The ForecastUSD 5.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.728Reported 2.087, pulled toward 1.0 (Blume)
    Cost of equity14.50%Risk-free + beta x equity risk premium
    Cost of debt6.19%Interest expense / average total debt
    Market capitalisationUSD 195.3bn98.1% of capital
    Total debtUSD 3.9bn1.9% of capital, book value as a proxy
    Tax rate13.7%Effective, capped at statutory
    WACC14.33%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 85.60

    74% of EV

    Forecast FCFF, final year
    USD 2.2bn
    Capex at depreciation, working capital in reinvestment
    USD 3.8bn
    Less reinvestment at g/ROIC (11.1% of NOPAT)
    USD -423.8m
    Capitalised
    USD 3.4bn
    ROIC (reported)
    22.5%
    Terminal value, undiscounted
    USD 29.5bn
    Terminal value, discounted
    USD 16.1bn
    Enterprise value
    USD 21.8bn
    Less net debt
    USD 2.2bn
    Equity value
    USD 19.6bn

    Exit at 20.0x EBITDA

    Value per shareUSD 280.79

    92% of EV

    Terminal value, undiscounted
    USD 111.1bn
    Terminal value, discounted
    USD 60.8bn
    Enterprise value
    USD 66.5bn
    Less net debt
    USD 2.2bn
    Equity value
    USD 64.3bn

    Spread between methods: 107%.

    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%
    12.33%102.91105.39108.09111.05114.33
    13.33%91.9193.7695.7797.95100.33
    14.33%82.6984.1085.6087.2388.98
    15.33%74.8675.9377.0878.3079.61
    16.33%68.1468.9669.8370.7671.74

    Outlined: this model. Green text: above today's price of 858.79. 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
    Discount rate14.3%4.0%-10.3pp
    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.