Seagate Technology Holdings plc (STX): what the price requires
At today's price, Seagate Technology Holdings plc (STX) is priced for today's economics sustained for ~11.5 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/STX
Headline
| Field | Value |
|---|---|
| Ticker | STX |
| Company | Seagate Technology Holdings plc |
| Sector / Industry | Technology |
| Current price | $863.59/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Must persist for | 11.5y |
| Multiple paid | 104x operating income |
Solve inputs: computed at a 11.2% cost of capital; growth searched up to the 36.6% self-funding ceiling; each 1pp moves the implied horizon ~1.2 years.
Reconcile: at the x-ray's 9.3% required return this reads ~9.2 years; the models below use their own rates.
How unusual the bet is: elevated
| Reference | Value |
|---|---|
| vs own history | +0.03σ |
| sustained it ~10 years at this level | 7% |
| implied end-window share | 1% |
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.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 4.46x | 3 | expensive |
| Earnings | 8.58x | 5 | expensive |
| Relative | 2.34x | 5 | expensive |
| Growth | 0.86x | 3 | justifies |
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 9.1%); the inversion above states its own rate.
Per-Model Detail (n=16)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $646.44 | 1.34x | yes | FCF base $3.2B, growth 25% (input: historical growth), terminal g 4.0%, WACC 9.1%, 7yr projection |
| DCF Exit Multiple | Growth | $1179.12 | 0.73x | yes | Exit EV/EBITDA: 60.2x / 63.2x / 66.2x (bear / base = today's held flat / bull), 7yr |
| Relative Valuation | Relative | $499.49 | 1.73x | yes | P/E 44.55x (blended: static sector reference 28x + trailing (TTM) 83x), scenarios: 35.6x / 44.5x / 53.5x (bear / base = reference held flat / bull), EV/EBITDA 32.97x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $112.26 | 7.69x | yes | BV/sh $4.78, ROE (TTM) 217.2%, ke 9.3% |
| Two-Stage Excess Return | Asset | $3985.24 | 0.22x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $1007.11 | 0.86x | yes | Rev $11.0B, growth 29% (input: historical growth; tapered), Terminal P/S: 9.6x / 12.0x / 14.4x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $368.90 | 2.34x | yes | EPS $10.54, growth 35% (input: historical EPS growth), PEG=2.38 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $61.49 | 14.04x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $1.52B × (1−13%) / WACC 9.1% → EPV (no growth) |
| Residual Income | Asset | $193.82 | 4.46x | yes | BV $4.78 + 5yr PV of (ROE (TTM) 217.2% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $33.67 | 25.65x | yes | √(22.5 × EPS $10.54 × BVPS $4.78) — Graham's conservative floor (excluded from median) |
| EV/EBITDA Relative | Relative | $264.05 | 3.27x | yes | EBITDA $3.17B × sector EV/EBITDA 20.0x |
| FCF Yield | Earnings | $100.63 | 8.58x | yes | FCF $2412.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $90.34 | 9.56x | yes | SBC-adj FCF $2.19B (FCF $2.41B − SBC $0.22B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $340.09 | 2.54x | yes | EPS $10.54 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $11.02 | 78.37x | yes | BV $4.78 × (ROIC 20.9% / WACC 9.1%) (excluded from median) |
| P/Sales Sector | Relative | $288.47 | 2.99x | yes | Revenue $11.01B × sector P/S 6.0x |
| PEG Fair Value | Relative | $395.25 | 2.18x | yes | EPS $10.54 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $113.95 | 7.58x | yes | EPS $10.54 / 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 | $2.8b |
| Net debt / NOPAT (after-tax) | 1.69x |
| Net debt / operating income (pre-tax) | 1.46x |
| Share count CAGR (dilution) | 0.8% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- Seagate has flipped from commodity cyclical to allocation-constrained AI supplier: fiscal third-quarter revenue rose 44 percent year over year with record gross margin near 47 percent, and management says nearline drive capacity is largely spoken for through calendar 2027.
- At $909.84 (July 10, 2026) the market is paying about 110 times operating income, a multiple at the very top of the peer distribution that embeds growth near the fastest self-fundable pace for roughly a dozen years; only about 7 percent of comparable fast-growers sustained that for even ten.
- The fiscal fourth-quarter report in late July, guided to roughly $3.45 billion of revenue and about $5.00 of non-GAAP EPS, is the next test of whether the HAMR-driven ramp keeps outrunning a price that already assumes it.
Bull Case
What the standard valuation arithmetic misses about Seagate is that the thing being valued changed identity. Every backward-looking model prices a hard-drive maker: cyclical, price-taking, structurally besieged by flash. The business actually operating in 2026 is one of two suppliers of a suddenly scarce input to AI infrastructure, mass-capacity storage, selling drives that are allocated rather than sold, with nearline capacity largely committed through calendar 2027. When a commodity vendor becomes a capacity-constrained oligopolist mid-cycle, trailing multiples measure the corpse of the old business, not the economics of the new one. The fiscal third quarter showed the new economics plainly: revenue up 44 percent year over year, gross margin at a record near 47 percent, and nearly a billion dollars of free cash flow in a single quarter.
The technological moat under that shift is HAMR. Seagate's Mozaic heat-assisted platform raises areal density, which lowers cost per terabyte on the dimension hyperscalers actually buy, and the 10-K frames the company's differentiation across "capacity, performance, product quality, reliability, price, form factor, interface, power consumption efficiency", with power efficiency increasingly decisive in data centers rationing every watt toward GPUs. Hard drives still store the cold and warm data lakes AI training feeds on at a fraction of flash's cost per terabyte, and the filing's own description of fiscal 2025, "supply and demand remained well balanced... supporting a healthy pricing environment", has since tightened into outright allocation. Management raised its long-term revenue growth target from low-to-mid-teens to at least 20 percent annually.
The financial model converts scarcity into cash unusually well. Operating margin runs about 28 percent on the current basis, net debt is under one year of operating income with interest covered more than ten times, and the drive industry's consolidation to effectively two scaled players means capacity discipline, the thing that always broke this industry, is now structurally easier to maintain. The bear will say the multiple already prices years of this; that is true and it is the real debate. But the bull's core claim is narrower and stronger: demand visibility through 2027 is contracted, the HAMR cost curve is proprietary, and the cash is arriving now, not in a projection.
Bear Case
Put the valuation approaches side by side and notice which ones have to be wrong for the price to be right. The cash-flow-yield lens says trailing free cash flow of $2.4 billion capitalized without growth supports about a ninth of today's price. Normalized earnings power across five years supports about a fifteenth. Peer multiples, even blending today's elevated trailing 88x earnings with a 28x sector median, read the price at roughly two and a half times what they defend. The only frames that reach $909.84 are the forward-growth ones, and the exit-multiple version gets there by holding today's roughly 67x EV/EBITDA flat for seven years. When the honest conservative methods and the price disagree by factors of nine and fifteen, the price is not being supported by valuation at all; it is being supported by a story about the future, and the conservative methods are the record of what happens when storage stories end.
The engine's decomposition of the price makes the requirement explicit: about 110 times operating income, implying growth held near the 36.6 percent self-funding ceiling for roughly twelve years. Only about 7 percent of comparable fast-growers sustained that pace for even ten years, and Seagate's own filing catalogs the ways this industry has broken before: flash economics keep improving, with "SSDs that offer increased competition with our lower capacity, smaller form factor HDDs and a declining trend in demand for HDDs in our legacy markets", and the HAMR transition itself carries qualification risk, since development or production cycles "longer than anticipated" could cost sales and share. A decade-plus of ceiling-rate compounding leaves no quarters to spare for a qualification slip, a NAND price collapse that moves the flash crossover point, or an AI capex digestion year.
And the customer structure guarantees the cycle will eventually reassert itself. The 10-K concedes results are "highly dependent on cloud, enterprise" demand: a handful of hyperscalers whose storage purchasing has always come in violent waves. Today they are locking allocation through 2027; the same concentration means that when they digest, they digest simultaneously, and an allocation-constrained supplier becomes an inventory-burdened one in two quarters. The balance sheet would survive that easily. The multiple would not: at 19 times sales for a business whose five-year average operating income is a fifteenth of what the price capitalizes, mean reversion in either demand or sentiment does the work of any operational failure. This is the top of the peer distribution pricing perfection in an industry whose defining historical feature is that perfection never lasted.
Valuation
Today's $909.84 (July 10, 2026) capitalizes Seagate at about 110 times operating income, which resolves into an assumption of operating growth held near its self-funding ceiling, around 36 percent a year, for roughly twelve years. Three context points calibrate that bet. The near-term pace is within what the company has recently delivered, so the requirement is not about next quarter. The multiple sits at the very top of the storage peer distribution, well beyond the upper quartile. And of comparable fast-growers historically, only about 7 percent sustained this level for ten years. The priced-in assumption is high: a demanding bet on continued execution, in the block's own characterization.
The method families arrange themselves in a perfect gradient of time horizon. The forward-growth family is the only one that reaches the price, its median essentially at par, though its base case requires today's roughly 67x EV/EBITDA to hold for seven years. Peer multiples read the price about two and a half times above what they defend (a 45.9x blended earnings multiple against the trailing 88x). The earnings-power and cash-yield lenses land at eight to fifteen times below the price, because trailing free cash flow of $2.4 billion is a 1.2 percent yield on a $208 billion market cap, and five-year normalized operating income reflects the pre-AI storage cycle. Two measurement bases deserve one bridging clause: the trailing EDGAR-basis operating income runs well above the record basis the 110x header prices, reflecting how fast the ramp is moving through the statements; on either basis the multiple is extraordinary. The spread across families is the finding: this is a durability premium the static frames structurally cannot reach, and the market is paying it knowingly.
What has to be true is specific and checkable. Revenue must compound at the raised target of at least 20 percent annually, gross margins must hold near the record 47 percent the third quarter printed, and the nearline allocation extending through calendar 2027 must convert into contracted revenue rather than cancellable enthusiasm. Solvency is a non-issue and cuts bullish: net debt of $2.8 billion is about 0.9 times pre-tax operating income on the EDGAR basis, interest coverage runs 10.5 times, and the company generates rather than consumes cash, though the share count has drifted up 0.8 percent a year rather than shrinking. The decisive variable is duration: every year the AI storage cycle runs hot is a year the growth family's read stays reachable, and the first flat hyperscaler order book re-prices the stock toward frames that currently sit far below it.
Catalysts
The fiscal fourth-quarter report in late July arrives pre-framed by guidance of roughly $3.45 billion in revenue, plus or minus $100 million, and non-GAAP EPS of about $5.00, plus or minus $0.20. The third quarter beat on both lines with revenue up 44 percent year over year and record gross margin near 47 percent, and the stock has traded as a momentum vehicle around each print. Beyond the headline, the reads that matter are gross-margin trajectory (the record level is the multiple's foundation) and any extension of allocation commitments beyond calendar 2027.
HAMR execution milestones are the standing catalyst stream: qualification progress for Mozaic-based drives across additional hyperscaler customers, capacity-point increases per platter generation, and the rollout of HAMR products into consumer, gaming, and professional lines that management flagged this spring. Each successful qualification tightens the cost-per-terabyte gap against both Western Digital and the flash alternative; any slip in cycle time is the specific risk the 10-K itself flags for advanced technology transitions.
The macro channel is hyperscaler capex. Nearline demand visibility through 2027 rests on AI data-center buildouts continuing at their announced pace, so cloud providers' quarterly capex guidance functions as Seagate's leading indicator, in both directions. Watch also NAND pricing: a sharp flash price decline moves the SSD-versus-HDD crossover point in the cold-storage tiers where Seagate's volume lives. Sell-side long-term models were rebuilt around management's raised growth target of at least 20 percent annual revenue growth this spring; the revision cycle around the July print will show whether the street keeps underwriting the new slope.
Peer Cohorts (Per Segment, With Filing Citations)
Storage solutions (single segment) (reported)
- WDC (WESTERN DIGITAL CORPORATION)
- (no filing in the citation store)
- SNDK (Sandisk Corporation)
- (no filing in the citation store)
- NTAP (NetApp, Inc.)
- (no filing in the citation store)
- MU (Micron Technology, Inc.)
- (no filing in the citation store)
- SMCI (SUPER MICRO COMPUTER, INC.)
- (no filing in the citation store)
- HPE (HEWLETT PACKARD ENTERPRISE COMPANY)
- (no filing in the citation store)
- IBM (INTERNATIONAL BUSINESS MACHINES CORP)
- (no filing in the citation store)
- HPQ (HP 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.
Sources
company FQ3 2026 results and commentary, April 2026 · company FQ4 2026 guidance · company FQ3 2026 commentary, April 2026 · company FQ3 2026 results · company commentary via Trefis, April 2026 · company long-term model update, April 2026 · company FQ4 2026 guidance, April 2026 · company FQ3 2026 results coverage · FQ3 2026 commentary · Trefis and Simply Wall St coverage, April-May 2026