NXP Semiconductors N.V.NXPINASDAQ

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

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $283.66 per share(market-calibrated)

+30.5%

Upside to Fair Value

Current

$217.32

Pure Model

$280.64

Fair Value

$283.66

Bull Case

$366.27

Bear Case

$206.13

Market Reality Check

Model Terminal Growth

3.75%

Market-Implied Growth

4.70%

Calibrated Growth

3.99%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $280.64.

What's Driving This Ratingfor NXPI

↓

CapEx normalizing toward maintenance

Historical CapEx is 6.99% of revenue (heavy investment phase). Model fades this to 6.00% by Year 10, freeing up ~$208M in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 24.96% — below the sector mature average of 26.98%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $5.2B (24.99% margin).

↑

Strong near-term revenue growth

Analyst consensus projects 10.34% revenue growth in Year 1, fading to 3.75% by Year 5 and 3.75% by Year 10. Revenue reaches $21.0B by Year 10 (vs $12.3B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $189.65/share (18.0x terminal FCF) while exit multiple gives $371.64/share (42.4x 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.

✓

Model and market roughly agree

Market-implied terminal growth of 4.70% is close to the model's 3.75% (only 95bps apart). The DCF assumptions are well-aligned with how the market is pricing this stock.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 66.08% indicates efficient cash generation. FCF reaches $4.7B by Year 10 (22.30% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.46

Market Risk Premium4.50%

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

Cost of Equity (Re)11.06%

Cost of Debt

Pre-tax Cost of Debt3.30%

Tax Rate20.25%

After-tax Cost of Debt2.63%

Equity Weight (E/V)81.80%

Debt Weight (D/V)18.20%

WACC Calculation

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

WACC = (81.80% × 11.06%) + (18.20% × 2.63%)

= 9.53%

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	$13.5B	$16.0B	$17.5B	$18.8B	$21.0B
EBIT	$3.4B	$4.0B	$4.4B	$4.7B	$5.2B
Tax	$684M	$807M	$883M	$950M	$1.1B
NOPAT	$2.7B	$3.2B	$3.5B	$3.7B	$4.2B
+ Depreciation	$1.2B	$1.4B	$1.5B	$1.6B	$1.8B
- Capex	$946M	$1.1B	$1.1B	$1.2B	$1.3B
- Δ NWC	$137M	$113M	$68M	$73M	$82M
Free Cash Flow	$2.8B	$3.4B	$3.8B	$4.1B	$4.7B
Discount Factor	0.913	0.761	0.634	0.529	0.403
Present Value	$2.6B	$2.6B	$2.4B	$2.2B	$1.9B

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

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$4.7B

Terminal Growth Rate3.75%

WACC9.53%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$84.0B

PV of Terminal Value$33.8B

Exit Multiple Method

Year 10 EBITDA$7.1B

Exit Multiple (EV/EBITDA)28.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$198.3B

PV of Terminal Value$79.8B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$23.0B

PV of Terminal Value$33.8B

Enterprise Value$56.9B

(-) Net Debt$9.0B

Equity Value$47.9B

Shares Outstanding253M

Price per Share$189.65

Exit Multiple Method

PV of Projected FCFs$23.0B

PV of Terminal Value$79.8B

Enterprise Value$102.9B

(-) Net Debt$9.0B

Equity Value$93.9B

Shares Outstanding253M

Price per Share$371.64

Pure Model Fair Value

$280.64

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%
7.53%	$351.37	$363.17	$378.09	$397.56	$424.04
8.53%	$306.02	$313.30	$322.09	$332.94	$346.67
9.53%	$270.21	$275.01	$280.64	$287.34	$295.44
10.53%	$240.77	$244.09	$247.90	$252.33	$257.51
11.53%	$215.89	$218.28	$220.97	$224.04	$227.55

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

$206.13

-5.1% vs current

• -25% vs analyst consensus
• Terminal growth: 3.3%
• Beta: 1.82

Base Case

$280.64

29.1% vs current

• Analyst consensus
• Terminal growth: 3.8%
• Beta: 1.46

Bull Case

$366.27

68.5% vs current

• +25% vs analyst consensus
• Terminal growth: 4.3%
• Beta: 1.24

Key Assumptions & Drivers• Technology Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth10.34%

Year 3 Revenue Growth6.98%

Year 5 Revenue Growth3.75%

Year 7 Revenue Growth3.75%

Year 10 Revenue Growth3.75%

Terminal Growth Rate3.75%

Margin & Efficiency

Current EBIT Margin24.96%

Terminal EBIT Margin26.98%

Tax Rate20.25%

Historical Capex / Rev6.99%

Terminal Capex / Rev6.00%

NWC / Revenue10.81%

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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