Seagate Technology PLC (STX)

Conclusion

Seagate Technology PLC designs and sells data storage products, including hard drives, solid-state drives and storage systems, mainly to original equipment manufacturers, distributors and retailers. On 9 November 2026 the share price was 506.14 USD, giving a market capitalisation of 116.2 billion USD.

The verdict is overvalued. Today's P/E of 26.4 compares with a ten-year median of 13.3, EV/EBITDA of 21.0 with 11.6, and price to free cash flow of 27.9 with 17.1. The DCF gives 132.81 USD per share at a discount rate of 15.88%. The fair value band runs from 155.08 to 232.62 USD with a midpoint of 193.85 USD, a margin of safety of -61.7%. The fair value from historical multiples is 254.89 USD. The reverse DCF implies growth of 23.8% a year, against revenue growth of 2.7% a year over five years and free cash flow per share growth of 24.1% a year over the same period.

What holds the case up is the operating margin of 39.5%, ROIC of 100.7% against a WACC of 15.7%, and free cash flow conversion of 94.8% on a trailing twelve-month basis. What would break it is the revenue record: revenue grew 2.7% a year over five years and 0.9% over ten, so the price relies on sustained earnings momentum. The valuation premiums are the second weakness, with price to sales at 8.4 against a median of 1.7. The third is the share price itself, which stood at 965.00 USD on 30 June 2026 and is now 506.14 USD.

Financial health

Financial strength is green, held up by the Altman Z-score of 12.81, net debt to EBITDA of 0.20, interest coverage of 21.6x and a current ratio of 1.82. The quick ratio is 1.04 and debt to equity is 0.68. The Altman Z-score sits in the safe zone. The Altman model was designed for manufacturers, which Seagate broadly is, so the zone is a fair reference. Insolvency risk: low, about 0.5% by the estimate of the Ohlson model over one to two years. Net debt is small relative to earnings, and the company covers its interest many times over, so the balance sheet does not constrain the investment case.

Earnings quality

Earnings quality is green, supported by a Piotroski score of 8 out of 9, free cash flow conversion of 106.2% over five years and an accrual ratio of -5.5%, which points to cash earnings exceeding reported profit. Stock-based compensation is 1.6% of revenue, and free cash flow after it is 3.94 billion USD. The share count fell at a compound 1.3% a year over five years, so buybacks have more than offset dilution. Seagate beat earnings estimates in all eight of the last quarters, with an average surprise of 9.3%. Estimates for the current year rose 11.4% over 90 days and for next year 19.4%. The Beneish M-score is not available.

Profitability

Profitability is green. The gross margin is 50.4% against a ten-year median of 28.8%, the operating margin 39.5% against 14.1%, and the net margin 31.9% against 11.4%. The operating margin stability is 0.67. ROIC is 100.7% against a WACC of 15.7%, and the given ROIC minus WACC value is 84.9%, so the business creates value well above its cost of capital. Return on equity of 127.3% needs care. The DuPont split shows a net margin of 26.1%, asset turnover of 1.22 and an equity multiplier of 4.60, so leverage contributes a large part of the headline return. The five-year median ROIC of 32.1% is a more conservative reference.

Growth

Growth is green on the strength of earnings, even though revenue growth is modest. Revenue compounded at 18.2% a year over three years, but only 2.7% over five years and 0.9% over ten. Revenue grew in six of the last ten years. Earnings per share grew at 21.0% a year over five years and 32.7% over ten, and free cash flow per share at 64.9% over three years, 24.1% over five and 14.1% over ten. Analysts expect next-year earnings per share to grow 63.4%. The three-year figures are much stronger than the long-run revenue trend, so the earnings story depends on recent momentum being sustained.

Valuation

Valuation is red, as the company trades well above its own history and the margin of safety is -61.7%. The P/E of 26.4 is a premium of 98.6% to its ten-year median of 13.3, EV/EBITDA of 21.0 a premium of 80.5% to 11.6, and price to free cash flow of 27.9 a premium of 62.9% to 17.1. The DCF gives 132.81 USD per share at a discount rate of 15.88%, with 29.4% of its value in the terminal value. The fair value band of 155.08 to 232.62 USD is built on fixed assumptions, including a 5% equity risk premium and capped growth, so it is an order of magnitude, not a price target. The fair value from historical multiples is 254.89 USD. The reverse DCF implies growth of 23.8%, against revenue growth of 2.7% and free cash flow per share growth of 24.1% over five years. The dividend yield is 0.56% and the payout on free cash flow is 15.6%.

Risks

Each weak number matters. Low revenue growth of 2.7% over five years means that sustaining the price depends on margins and buybacks rather than volume. Valuation premiums of 98.6% on earnings and 391.4% on sales leave little room if earnings growth slows. The DCF rests on a 15.88% discount rate, and its result falls well below the market price. Beta is 2.201, so the shares can swing sharply. The Beneish M-score is not available. The company does not report a debt maturity schedule or revenue by segment, so refinancing risk and the product mix cannot be checked. This analysis covers only the figures listed above and does not cover market conditions or competition.