NXP Semiconductors N.V.NXPINASDAQ

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

DCF Valuation

DCF Valuation Summary

Buy

Fair Value: $294.86 per share(market-calibrated)

+20.3%

Upside to Fair Value

Current

$245.09

Pure Model

$292.04

Fair Value

$294.86

Bull Case

$380.41

Bear Case

$214.78

Market Reality Check

Model Terminal Growth

3.75%

Market-Implied Growth

5.23%

Calibrated Growth

3.97%

Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $292.04.

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.

✓

Premium margins already priced in

EBIT margin of 26.59% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

↑

Strong near-term revenue growth

Analyst consensus projects 10.25% 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 $196.89/share (17.5x terminal FCF) while exit multiple gives $387.20/share (42.0x 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 $245.09, the market implies 5.23% perpetual growth — 148bps 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 66.70% indicates efficient cash generation. FCF reaches $4.9B by Year 10 (23.58% 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)83.52%

Debt Weight (D/V)16.48%

WACC Calculation

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

WACC = (83.52% × 11.06%) + (16.48% × 2.63%)

= 9.67%

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	$3.6B	$4.2B	$4.6B	$5.0B	$5.6B
Tax	$728M	$860M	$940M	$1.0B	$1.1B
NOPAT	$2.9B	$3.4B	$3.7B	$4.0B	$4.5B
+ Depreciation	$1.2B	$1.4B	$1.5B	$1.6B	$1.8B
- Capex	$946M	$1.1B	$1.1B	$1.2B	$1.3B
- Δ NWC	$136M	$114M	$68M	$73M	$82M
Free Cash Flow	$3.0B	$3.6B	$4.0B	$4.4B	$4.9B
Discount Factor	0.912	0.758	0.630	0.524	0.397
Present Value	$2.7B	$2.7B	$2.5B	$2.3B	$2.0B

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

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$4.9B

Terminal Growth Rate3.75%

WACC9.67%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$86.7B

PV of Terminal Value$34.4B

Exit Multiple Method

Year 10 EBITDA$7.4B

Exit Multiple (EV/EBITDA)28.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$207.8B

PV of Terminal Value$82.5B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$24.3B

PV of Terminal Value$34.4B

Enterprise Value$58.7B

(-) Net Debt$9.0B

Equity Value$49.8B

Shares Outstanding253M

Price per Share$196.89

Exit Multiple Method

PV of Projected FCFs$24.3B

PV of Terminal Value$82.5B

Enterprise Value$106.8B

(-) Net Debt$9.0B

Equity Value$97.8B

Shares Outstanding253M

Price per Share$387.20

Pure Model Fair Value

$292.04

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%
7.67%	$364.27	$375.84	$390.36	$409.12	$434.30
8.67%	$318.23	$325.45	$334.13	$344.77	$358.13
9.67%	$281.63	$286.43	$292.04	$298.69	$306.68
10.67%	$251.41	$254.76	$258.58	$263.01	$268.18
11.67%	$225.81	$228.22	$230.94	$234.02	$237.55

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

$214.78

-12.4% vs current

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

Base Case

$292.04

19.2% vs current

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

Bull Case

$380.41

55.2% 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 Growth10.25%

Year 3 Revenue Growth7.07%

Year 5 Revenue Growth3.75%

Year 7 Revenue Growth3.75%

Year 10 Revenue Growth3.75%

Terminal Growth Rate3.75%

Margin & Efficiency

Current EBIT Margin26.59%

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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