Gen Digital Inc. (GEN)

Conclusion

Gen Digital Inc. sells cyber safety and identity protection products for individuals, families and small businesses, under brands including Norton, Avast and LifeLock. At a price of 29.80 USD on 2026-11-09, its market capitalisation is 17.7 billion USD.

The verdict is undervalued. The P/E of 14.7x is below its ten-year median of 17.2x, and EV/EBITDA of 10.4x is below its median of 14.0x. The DCF gives 54.06 USD per share at a discount rate of 11.1%. The fair value band runs from 35.60 to 53.40 USD with a midpoint of 44.50 USD, a margin of safety of 49.3% at the current price. The reverse DCF implies revenue growth of 1.9% a year, against a five-year revenue CAGR of 14.4%.

The strongest numbers are the operating margin of 42.2%, against a ten-year median of 32.2%, and ROIC of 12.3% against a WACC of 8.9%. The weakest are the current ratio of 0.37, net debt to EBITDA of 3.1x, and the Altman Z-score of 1.44, which sits in the distress zone. A further fall in earnings would weaken the case, since the three-year EPS CAGR is -9.7%.

Financial health

Financial health is red, held down by the current ratio of 0.37 and the Altman Z-score of 1.44. Net debt to EBITDA of 3.1x and interest coverage of 3.8x are assessed as neutral. The quick ratio is 0.28 and debt to equity is 2.96. The Altman model was designed for manufacturers, so its distress zone is a weak guide for a software company. Insolvency risk is medium, with a probability of about 3.9% by the estimate of the Ohlson model over one to two years, based on figures as of 2026-03-31.

Earnings quality

Earnings quality is green, led by free cash flow conversion of 146.3% on a trailing basis and 147.8% over five years. The accrual ratio is -3.7%, which means cash earnings are running ahead of reported earnings. Stock-based compensation is 4.3% of revenue, and free cash flow after it is 1.54 billion USD. The five-year share count CAGR is 0.6%, so there have been no net buybacks. The Piotroski score is 7 of 9 and the Beneish M-score is -2.13, which is read as unlikely to signal manipulation. The company beat estimates in seven of the last eight quarters, with an average surprise of 1.6%. Estimates for the next year rose 1.5% over 90 days, and forecast growth is 12.9%.

Profitability

Profitability is green. The operating margin is 42.2% against a ten-year median of 32.2%, and the net margin is 23.1% against a median of 20.6%. The gross margin is 77.4%, below its median of 80.5%. Operating margin stability is 0.68. ROIC of 12.3% against WACC of 8.9% gives a ROIC minus WACC value of 3.4%, which the company is assessed as creating value. ROE is 44.0%, but the DuPont split shows it is inflated by leverage: a net margin of 19.5%, an asset turnover of 0.32 and an equity multiplier of 5.97, all as of 2026-03-31.

Growth

Growth is green. Revenue has a compound growth rate of 14.7% over three years, 14.4% over five years and 3.3% over ten years. Revenue grew in eight of the last ten years. Free cash flow per share compounded at 26.9% over three years and 16.1% over five years. EPS is weaker: its CAGR is -9.7% over three years and -8.2% over ten, although it is 11.2% over five years.

Valuation

Valuation is green. Against ten-year medians, the P/E of 14.7x carries a discount of 14.7%, EV/EBITDA of 10.4x a discount of 26.0%, and price to free cash flow of 10.0x a discount of 23.0%. Price to book of 6.5x is a premium of 20.9% over its median. The DCF gives 54.06 USD per share at a discount rate of 11.1% and a terminal growth rate of 2.5%. The fair value from historical multiples is 34.93 USD. The fair value band is an order of magnitude built on fixed assumptions, not a price target. The reverse DCF implies growth of 1.9%, against five-year revenue growth of 14.4% and five-year free cash flow per share growth of 16.1%. The dividend yield is 1.75% and the payout on free cash flow is 17.6%.

Risks

The main risk is the balance sheet. A current ratio of 0.37 and a quick ratio of 0.28 leave little short-term cushion, and net debt of 3.1x EBITDA means a fall in earnings would weigh heavily on it. The Altman Z-score of 1.44 and the medium insolvency estimate point the same way. The three-year EPS decline would undercut the value case if it continues. The DCF relies on a terminal value that accounts for 50.8% of its value, so its result depends on long-run assumptions. Price to book is above its median, which suggests the market already values the asset base richly. This analysis has no debt maturity schedule and no revenue by segment, so it cannot judge refinancing risk or which products drive growth.