Gen Digital Inc. (GEN): what the price requires
The current priced-in claim for Gen Digital Inc. (GEN) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/GEN
Headline
| Field | Value |
|---|---|
| Ticker | GEN |
| Company | Gen Digital Inc. |
| Current price | $26.11/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 5.6% |
| Operating margin today | 36.0% |
| Margin compression implied | -30.4pp |
| Multiple paid | 14x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.
Solve inputs: computed at a 7.1% cost of capital with 4% terminal growth over a 5-year stage.
Reconcile: at the x-ray's 9.3% required return this reads ~4.5%/yr; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.27σ |
| cohort percentile (of 177 peers) | 17 |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.53x | 5 | expensive |
| Earnings | 1.91x | 5 | expensive |
| Relative | 0.44x | 5 | justifies |
| Growth | 0.48x | 3 | justifies |
Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.4%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $156.88 | 0.17x | yes | FCF base $1.7B, growth 25% (input: historical growth), terminal g 4.0%, WACC 7.4%, 7yr projection |
| DCF Exit Multiple | Growth | $54.01 | 0.48x | yes | Exit EV/EBITDA: 8.8x / 10.8x / 12.8x (bear / base = today's held flat / bull), 7yr |
| Relative Valuation | Relative | $54.66 | 0.48x | yes | P/E 27.63x (blended: static sector reference 35x + trailing (TTM) 17x), scenarios: 22.1x / 27.6x / 33.2x (bear / base = reference held flat / bull), EV/EBITDA 19.31x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $17.02 | 1.53x | yes | BV/sh $4.22, ROE (TTM) 37.3%, ke 9.3% |
| Two-Stage Excess Return | Asset | $37.13 | 0.70x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $36.29 | 0.72x | yes | Rev $5.0B, growth 27% (input: historical growth; tapered), Terminal P/S: 2.6x / 3.2x / 3.9x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $54.95 | 0.48x | yes | EPS $1.57, growth 35% (input: historical EPS growth), PEG=0.47 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $12.18 | 2.14x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $1.48B × (1−23%) / WACC 7.4% → EPV (no growth) |
| Residual Income | Asset | $26.73 | 0.98x | yes | BV $4.22 + 5yr PV of (ROE (TTM) 37.3% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $12.22 | 2.14x | yes | √(22.5 × EPS $1.57 × BVPS $4.22) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $77.74 | 0.34x | yes | EBITDA $2.24B × sector EV/EBITDA 25.0x |
| FCF Yield | Earnings | $13.65 | 1.91x | yes | FCF $1523.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $9.50 | 2.75x | yes | SBC-adj FCF $1.29B (FCF $1.52B − SBC $0.24B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $50.66 | 0.52x | yes | EPS $1.57 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $3.30 | 7.91x | yes | BV $4.22 × (ROIC 5.8% / WACC 7.4%) |
| P/Sales Sector | Relative | $64.72 | 0.40x | yes | Revenue $5.00B × sector P/S 8.0x |
| PEG Fair Value | Relative | $58.88 | 0.44x | yes | EPS $1.57 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $16.97 | 1.54x | yes | EPS $1.57 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $7.2b |
| Net debt / NOPAT (after-tax) | 5.56x |
| Net debt / operating income (pre-tax) | 4.25x |
| Share count CAGR (dilution) | 1.1% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- Gen Digital is a high-margin consumer subscription cash machine (about 42% operating margin, free cash flow near $1.5 billion) that allocates cash to acquisitions, buybacks, and a steady dividend.
- At $24 the stock trades well below most methods (blended landing near $53) with an inversion-implied margin near 5.6%, but the growth in those frames is largely acquired (MoneyLion), not organic (pro forma growth near 9%).
- The risk is the cycle plus leverage: the fast-growing consumer-finance segment (over 40% growth) is credit-sensitive, the legacy antivirus base is mature, and the MoneyLion deal pushed net debt to about 3.4x operating income on thin book equity.
Bull Case
How a company spends its cash tells you how confident management is, and Gen Digital's capital allocation reads as a team that trusts its model. The owner of Norton, Avast, LifeLock, and now MoneyLion runs an extraordinarily profitable consumer subscription business: a trailing operating margin around 42% and free cash flow near $1.5 billion. Management has deployed that cash for years through debt-funded acquisitions and consistent share repurchases, and it pays a steady dividend. The pattern is a deliberate choice to use a cash-rich, recurring-revenue base to roll up adjacent consumer-protection and consumer-finance franchises, concentrating per-share value while keeping the dividend intact.
The subscription engine behind that cash is sticky by design. Gen sells consumer cyber-safety, identity protection, and now financial wellness on annual auto-renewing memberships, and the 10-K notes the revenue seasonality tied to holiday purchases and the US tax-filing season, while pointing to the value proposition of its premium solutions (FY2025 10-K, accession 0000849399-25-000033). Once a household subscribes to Norton 360 or LifeLock, retention is high (LifeLock retention is near 90%), and the company keeps cross-selling higher tiers. Norton 360 cross-sell penetration now exceeds 26% of the base, with higher-tier annualized bookings above $0.5 billion.
The MoneyLion acquisition reshaped the growth profile, and the early read is strong. Fiscal 2026 revenue crossed $5.0 billion, up 27% as reported and accelerating to double digits, with the Trust-Based Solutions (consumer finance) segment growing over 40% and reaching 107 million connected accounts, up 36%. Cyber Safety margins held at 61%. Management guides fiscal 2027 revenue to $5.325 billion to $5.425 billion and EPS to $2.85 to $2.95. The valuation methods see a business priced well below them, with a blended landing near $53 against a $24 price (June 27, 2026). A high-margin subscription compounder using its cash to buy growth and shrink the share count is the capital-allocation story the bull case rests on.
Bear Case
The bear case starts with where Gen sits in its own cycle. The core Cyber Safety business, Norton and Avast consumer antivirus and identity protection, is a mature category whose organic growth has been low for years, which is precisely why management has leaned on acquisitions to keep the headline numbers moving. The fiscal 2026 revenue jump of 27% is mostly the MoneyLion acquisition, not organic expansion; on a pro forma basis growth was closer to 9%. That distinction matters because the price increasingly depends on the consumer-finance business sustaining its 40%-plus growth, and consumer fintech is a far more cyclical, credit-sensitive category than antivirus subscriptions. A downturn in consumer credit or spending would hit MoneyLion's trajectory hardest, just as it becomes the growth engine.
The demand cycle for the legacy business is also less defensive than it looks. Consumer cybersecurity faces saturation, free and bundled alternatives (operating systems and browsers now ship with built-in protection), and price-sensitive subscribers who churn when budgets tighten. The seasonality the 10-K flags, revenue tied to holiday purchases and tax season, is a reminder that even the recurring base has cyclical demand peaks that a weak consumer year can dent. Subscriber acquisition costs rise as the category matures, pressuring the high margins that anchor the bull case.
The capital structure adds the cyclical risk that should worry a buyer. Funding the MoneyLion deal pushed net debt to roughly $7.2 billion, about 3.4x trailing operating income, on a very thin book-equity base (around $4.22 per share). Gen is now a levered roll-up entering a period where its fastest-growing segment is its most economically sensitive. The earnings-power frame, valuing the business at no growth, lands near $12, half the price, and the conservative excess-return and FCF-yield frames land near $9 to $17, well below the market. The price is supported by relative and growth-DCF frames that assume the acquisitions keep compounding; if consumer credit turns or the legacy base erodes faster than MoneyLion grows, the levered structure leaves little cushion.
Valuation
Inverting the $24.16 price produces a conservative read for a 42%-margin business: the implied operating margin is only about 5.6%, far below what Gen earns today, which the engine characterizes as supported by relative-multiple and growth-DCF value while the earnings-power frame says expensive.
The model X-ray is wide, and the thin book-equity base distorts the asset frames. Against those, the earnings-power frame lands near $12, the FCF-yield near $14, the Graham number near $12, and the simple excess-return model near $17 (the 37% trailing ROE on a $4.22 book value is an artifact of the lean equity, not a clean return). The blended landing across applicable methods is near $53, more than double the price.
The spread is the information, but it needs the right caveat. Gen converts a huge share of revenue to cash and trades at a low-teens multiple of free cash flow, which the relative and growth frames read as cheap. The catch is that the growth in those frames is largely acquired, not organic, so the gap to the methods is only as durable as the MoneyLion thesis and continued M&A. The peer set, PTC, PCTY, CDNS, SPSC, and YOU, is software and consumer-platform names where mid-20s multiples are normal, so Gen sits at a steep discount to that cohort. The investable question is whether that discount is the market correctly pricing a levered roll-up whose growth is bought and whose fastest segment is credit-sensitive, or an overcorrection on a cash-rich subscription franchise. Net debt near 3.4x operating income means the balance sheet is the constraint if the consumer-finance growth or the legacy base disappoints.
Catalysts
Gen Digital reported fiscal Q4 2026 on May 8, with quarterly revenue of $1.28 billion (up 27% as reported, 9% pro forma) and full-year fiscal 2026 revenue crossing $5.0 billion, up 27%. By segment, Cyber Safety margins held at 61%, Norton 360 cross-sell penetration exceeded 26% of the base with higher-tier bookings above $0.5 billion, LifeLock retention was near 90%, and the MoneyLion-led Trust-Based Solutions segment grew over 40% with 107 million connected accounts. Management guided fiscal 2027 revenue to $5.325 billion to $5.425 billion and EPS to $2.85 to $2.95, with Q1 fiscal 2027 revenue of $1.300 billion to $1.325 billion (8% to 10% growth).
The central catalyst is the MoneyLion integration and the consumer-finance growth curve. The data points to watch are whether Trust-Based Solutions sustains its 40%-plus growth and connected-account expansion, since that segment now drives the growth narrative, and whether Cyber Safety cross-sell and higher-tier penetration keep lifting the mature base. Continued buybacks and deleveraging are the steady levers on per-share results given the post-acquisition debt load. The consumer-credit and spending backdrop is the macro variable that matters most, because the fastest-growing segment is the most economically sensitive, and further M&A would extend the roll-up strategy.
Sources: Gen Digital fiscal Q4 2026 results (PRNewswire, Motley Fool transcript, Investing.com, 2026); FY2025 10-K (accession 0000849399-25-000033).
Peer Cohorts (Per Segment, With Filing Citations)
Cyber Safety (consolidated) (reported)
- YOU (CLEAR SECURE, INC.)
- (no filing in the citation store)
- CHKP (CHECK POINT SOFTWARE TECHNOLOGIES LTD.)
- (no filing in the citation store)
- FTNT (Fortinet Inc)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.