Micron Technology, Inc.MUNASDAQ

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

⚠️Model Warnings

•Revenue projections show 23% decline from peak. Analyst estimates may reflect secular headwinds or transition period.

DCF Valuation Summary

Sell

Fair Value: $312.41 per share(market-calibrated)

-24.3%

Upside to Fair Value

Current

$412.67

Pure Model

$298.91

Fair Value

$312.41

Bull Case

$405.58

Bear Case

$202.59

Market Reality Check

Model Terminal Growth

3.75%

Market-Implied Growth

8.02%

Calibrated Growth

4.82%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $298.91.

What's Driving This Ratingfor MU

↓

CapEx normalizing toward maintenance

Historical CapEx is 28.90% of revenue (heavy investment phase). Model fades this to 6.00% by Year 10, freeing up ~$23.7B in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 10.61% — below the sector mature average of 26.41%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $21.0B (20.29% margin).

⚠

Analyst growth decelerates sharply

Revenue growth drops from 104.32% in Year 1 to 8.62% by Year 5 (per analyst consensus). This growth deceleration is a key reason the model may undervalue the stock if growth re-accelerates.

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $187.73/share (14.4x terminal FCF) while exit multiple gives $410.10/share (36.3x terminal FCF). The 28x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 3.75% growth is more conservative. The base case averages both methods.

🎯

Market pricing in higher long-term growth

To justify $412.67, the market implies 8.02% perpetual growth — 427bps above the model's 3.75%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 77.19% indicates efficient cash generation. FCF reaches $32.1B by Year 10 (31.03% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.50

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)11.27%

Cost of Debt

Pre-tax Cost of Debt2.36%

Tax Rate11.63%

After-tax Cost of Debt2.08%

Equity Weight (E/V)96.79%

Debt Weight (D/V)3.21%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (96.79% × 11.27%) + (3.21% × 2.08%)

= 10.98%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$76.4B	$102.4B	$78.4B	$90.0B	$103.4B
EBIT	$8.1B	$10.9B	$8.3B	$14.2B	$21.0B
Tax	$943M	$1.3B	$968M	$1.7B	$2.4B
NOPAT	$7.2B	$9.6B	$7.4B	$12.6B	$18.5B
+ Depreciation	$15.2B	$20.4B	$15.6B	$17.9B	$20.6B
- Capex	$22.1B	$24.4B	$14.7B	$12.3B	$6.2B
- Δ NWC	$8.7B	$1.1B	$1.4B	$1.3B	$838M
Free Cash Flow	-$8.4B	$4.5B	$6.9B	$17.0B	$32.1B
Discount Factor	0.901	0.732	0.594	0.482	0.353
Present Value	-$7.6B	$3.3B	$4.1B	$8.2B	$11.3B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$32.1B

Terminal Growth Rate3.75%

WACC10.98%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$460.5B

PV of Terminal Value$162.5B

Exit Multiple Method

Year 10 EBITDA$41.6B

Exit Multiple (EV/EBITDA)28.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$1.2T

PV of Terminal Value$410.7B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$52.6B

PV of Terminal Value$162.5B

Enterprise Value$215.1B

(-) Net Debt$5.6B

Equity Value$209.5B

Shares Outstanding1.1B

Price per Share$187.73

Exit Multiple Method

PV of Projected FCFs$52.6B

PV of Terminal Value$410.7B

Enterprise Value$463.3B

(-) Net Debt$5.6B

Equity Value$457.7B

Shares Outstanding1.1B

Price per Share$410.10

Pure Model Fair Value

$298.91

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.75%	3.25%	3.75%	4.25%	4.75%
8.98%	$370.80	$380.09	$391.16	$404.58	$421.17
9.98%	$326.13	$332.41	$339.70	$348.26	$358.46
10.98%	$289.45	$293.87	$298.91	$304.70	$311.42
11.98%	$258.58	$261.81	$265.42	$269.51	$274.16
12.98%	$232.16	$234.57	$237.24	$240.21	$243.55

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$202.59

-50.9% vs current

• -25% vs analyst consensus
• Terminal growth: 3.3%
• Beta: 1.88

Base Case

$298.91

-27.6% vs current

• Analyst consensus
• Terminal growth: 3.8%
• Beta: 1.50

Bull Case

$405.58

-1.7% vs current

• +25% vs analyst consensus
• Terminal growth: 4.3%
• Beta: 1.28

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Technology Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth104.32%

Year 3 Revenue Growth4.94%

Year 5 Revenue Growth8.62%

Year 7 Revenue Growth6.67%

Year 10 Revenue Growth3.75%

Terminal Growth Rate3.75%

Margin & Efficiency

Current EBIT Margin10.61%

Terminal EBIT Margin26.41%

Tax Rate11.63%

Historical Capex / Rev28.90%

Terminal Capex / Rev6.00%

NWC / Revenue22.42%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 28x EV/EBITDA (Technology sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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