NetApp, Inc. (NTAP): what the price assumes

In the published model solve dated 2026-Q2, anchored at $187.00, NetApp, Inc. (NTAP) is priced for +18.8% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.

Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/NTAP

Headline

FieldValue
TickerNTAP
CompanyNetApp, Inc.
Current price$187.00/sh
CompositionProduct revenues 46% / Support revenues 38% / Professional and other services revenues 6% / Public cloud revenues 10%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin (value-band context)22.7%
Operating margin today24.2%
Margin compression (value-band)-1.5pp
Implied growth18.8%
Multiple paid22x operating income

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 9.5% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

ReferenceValue
vs own history-0.02σ
cohort percentile (of 188 peers)35

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

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.

FamilyMedian price/FVModelsReads
Asset2.66x5expensive
Earnings2.16x5expensive
Relative2.12x2expensive
Growth0.78x3justifies

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.7%); the inversion above states its own rate.

Per-Model Detail (n=15)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$278.940.67xyesFCF base $2.0B, growth 5% (input: historical growth), terminal g 4.0%, WACC 8.7%, 6yr projection
DCF Exit MultipleGrowth$240.470.78xyesExit EV/EBITDA: 18.7x / 20.7x / 22.7x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative——noP/E 28x (static sector reference · 2026-04), scenarios: 23.4x / 28.0x / 32.6x (bear / base = reference held flat / bull), EV/EBITDA 20x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$70.412.66xyesBV/sh $6.90, ROE (TTM) 94.4%, ke 9.3%
Two-Stage Excess ReturnAsset$446.990.42xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$178.091.05xyesRev $6.9B, growth 5% (input: historical growth; tapered), Terminal P/S: 4.4x / 5.3x / 6.2x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$76.202.45xyesEPS $6.35, growth 11% (input: historical EPS growth), PEG=2.62 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$81.752.29xyesNormalized EBIT (5y avg op income, one-time charges added back) $1.34B × (1−22%) / WACC 8.7% → EPV (no growth)
Residual IncomeAsset$118.601.58xyesBV $6.90 + 5yr PV of (ROE (TTM) 94.4% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$31.395.96xyes√(22.5 × EPS $6.35 × BVPS $6.90) — Graham's conservative floor
EV/EBITDA RelativeRelative——noEBITDA $1.73B × sector EV/EBITDA 20.0x
FCF YieldEarnings$107.471.74xyesFCF $1869.0M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$86.402.16xyesSBC-adj FCF $1.49B (FCF $1.87B − SBC $0.38B) capitalized at Kₑ
Ben Graham FormulaEarnings$161.711.16xyesEPS $6.35 × (8.5 + 2×10.9%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$66.052.83xyesBV $6.90 × (ROIC 83.0% / WACC 8.7%)
P/Sales SectorRelative——noRevenue $6.92B × sector P/S 6.0x
PEG Fair ValueRelative$104.231.79xyesEPS $6.35 × (PEG 1.5 × growth 10.9% (input: historical EPS growth)) → PE 16.4x
Earnings YieldEarnings$68.652.72xyesEPS $6.35 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

UnitRoleValuation basisRevenueReported profitValue evidenceStatus
Hybrid Cloudoperatingenterprise$6.2b—withheldunresolved no unit value
Public Cloudoperatingenterprise$688.0m—withheldunresolved no unit value

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

FieldValue
Net cash$1.1b
Net debt / NOPAT (after-tax)-0.84x (net cash)
Net debt / operating income (pre-tax)-0.66x (net cash)
Interest coverage15.4x
Share count CAGR (buyback)-3.3%
Burning cashno

Bullet Takeaways

Bull Case

The instinctive bear on NetApp is that it sells a commodity, disk and flash arrays in a market squeezed between cloud providers above and cheap hardware below, a slow-growth legacy storage vendor. The recent results complicate that read. NetApp has steadily shifted its mix toward the parts of storage that are neither commodity nor slow: all-flash systems, public-cloud data services, and consumption-based subscriptions. All-flash revenue reached $1.2 billion in the most recent quarter, up 18% year over year, and the Keystone storage-as-a-service offering grew roughly 65%. A company growing its highest-value lines at double and triple the corporate rate is repricing itself away from the commodity label.

The margins back the case. NetApp runs an overall gross margin around 70%, the 10-K showing total gross margin of 70.7% on $4,433 million of gross profit, which is software-like for a company the market still files under hardware. That margin reflects the proprietary software, ONTAP, that runs on the systems and makes the data management sticky, not the metal it ships on. The AI wave is the new tailwind: NetApp cited 500 on-premises AI and data-preparation wins in the quarter and expanded partnerships with Google Cloud and a top-five neo-cloud provider, positioning its storage as the data layer feeding AI workloads in regulated and sovereign environments. AI does not just need GPUs; it needs the data those GPUs train on to live somewhere fast and governed, and that is what NetApp sells.

Capital allocation compounds the story. NetApp generates strong free cash flow, holds net cash of about $1.1 billion, and has shrunk its share count roughly 3.3% a year through buybacks while paying a dividend. Revenue grew 12% to a record $1.95 billion in the quarter and management guided fiscal 2027 revenue to $7.325 billion to $7.575 billion. The bull case is that the market still prices NetApp like declining hardware while its flash, cloud, and AI-adjacent mix increasingly behaves like a growing data-platform business.

Bear Case

The price bakes in a specific assumption: that NetApp sustains operating-profit growth near 17% a year and lifts its margin from the mid-20s toward the high teens on a forward basis, driven by the flash, cloud, and AI mix. That is the most fragile part of the thesis, because the company's overall growth is far more modest than its best lines suggest. Total revenue grew 12% in a strong quarter, and management's own fiscal 2027 guidance implies about 8% revenue growth at the midpoint, well below the pace the valuation extrapolates. The 18%-plus growth in all-flash and the 65% in Keystone are real, but they sit on top of a large base of more mature storage that grows slowly or not at all, and the blended rate is what the cash flows ultimately reflect.

The competitive backdrop is genuinely tough, and it cuts at both the growth and the margin. NetApp competes against Dell and Pure Storage in on-premises flash, against the hyperscalers' own storage services in the cloud, and against an industry where flash pricing follows the memory cycle. When NAND prices swing, storage-system pricing and margins swing with them, and NetApp does not control that input. The cloud providers it partners with are also competitors: every workload that moves to native cloud storage is a workload NetApp does not capture, and its public-cloud revenue, while growing, is still a small slice of the total. The AI demand is a tailwind today, but if enterprises standardize on hyperscaler data platforms for AI rather than on-premises NetApp systems, the most exciting part of the story could route around it.

The valuation reflects a market already crediting the optimistic mix. The relative-multiple and growth-discounted methods support today's price near $160 (June 27, 2026), but the asset-based and earnings-power methods call it expensive. At roughly 21 times blended earnings, the price assumes the high-value lines keep outgrowing the legacy drag and the AI demand persists. The balance sheet is sound, net cash and strong coverage, so this is not a solvency story; it is a question of whether a low-double-digit grower deserves a multiple that prices in better. If flash pricing rolls over or AI demand normalizes, an investor is left holding a competitive storage vendor at a growth multiple, and the static methods are already signaling there is no cushion underneath.

Valuation

NetApp's price is defended by two families of method and questioned by two. The relative-multiple lens, NetApp against its storage and infrastructure peers, and the growth-discounted methods both reach today's $160; the asset-based and earnings-power methods land below. That split says the price is supported by NetApp being a reasonably valued member of its peer group and by its growth continuing, not by a hard floor in book value or static earnings power.

Inverted, the price embeds operating-profit growth near 17% a year, with the margin improving on a forward basis. The tension is that the company's blended growth is slower than that: total revenue rose 12% in a strong quarter, and fiscal 2027 guidance implies about 8% at the midpoint. The reconciliation the bull case offers is mix, the all-flash, cloud, and Keystone lines growing far faster than the legacy base and dragging the average up over time, helped by the roughly 70% gross margin the software content commands. At about 21 times blended earnings, the multiple is not extreme for a profitable, cash-generative tech franchise, but it does require the high-value mix to keep winning and the AI-storage demand to hold. The price has credited that; it has not left a discount.

Solvency is a clear strength and bounds the downside. NetApp holds net cash of about $1.1 billion, interest is covered roughly fifteen times, and the share count has fallen about 3.3% a year, so buybacks plus the dividend return cash while the count shrinks. There is no balance-sheet risk here. The bet the buyer underwrites is that the shift toward flash, cloud, and AI-adjacent data services lifts NetApp's blended growth and margin enough to justify a multiple the relative and growth lenses support but the static methods do not. The business quality is real; the price assumes the mix shift keeps doing the work.

Catalysts

Fiscal fourth-quarter 2026 was a record. Revenue rose 12% year over year to $1.95 billion, and non-GAAP earnings per share of $2.43 grew 26% and beat the high end of guidance, per the company's release. The growth was led by the strategic lines: all-flash revenue of $1.2 billion was up 18% year over year, public-cloud revenue of $182 million rose 11% (18% excluding Spot), and Keystone storage-as-a-service grew about 65%.

AI was the recurring theme on the call. NetApp cited 500 on-premises AI and data-preparation wins in the quarter and expanded relationships with Google Cloud and a top-five neo-cloud provider, extending its reach into regulated and sovereign data environments where on-premises and hybrid storage still dominate. Management guided fiscal 2027 revenue to $7.325 billion to $7.575 billion, roughly 8% growth at the midpoint, with non-GAAP EPS of $8.70 to $9.

The markers to watch are the mix and the AI conversion. The trajectory of all-flash and Keystone growth tells you whether the high-value shift is still accelerating; the AI win count and the cloud-partner expansions tell you whether NetApp is capturing the data layer of enterprise AI rather than being routed around by hyperscaler-native storage; and the flash pricing environment, tied to the memory cycle, is the swing factor on margin. Each print tests whether the blended growth rate is rising toward what the valuation assumes.

Peer Cohorts (Per Segment, With Filing Citations)

Hybrid Cloud (reported)

Public Cloud (reported)

Methodology Note

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.

Sources

NetApp Q4 FY2026 earnings release · NetApp Q4 FY2026 earnings call · NetApp Q4 FY2026 results · NetApp Q4 FY2026 guidance

View the full interactive NTAP report on boothcheck