As of June 1, 2025, STMicroelectronics NV's estimated intrinsic value ranges from $12.78 to $60.26 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $60.26 | +41.7% |
| Discounted Cash Flow (5Y) | $57.38 | +35.0% |
| Dividend Discount Model (Multi-Stage) | $45.07 | +6.0% |
| Dividend Discount Model (Stable) | $56.83 | +33.7% |
| Earnings Power Value | $12.78 | -69.9% |
Is STMicroelectronics NV (STM.PA) undervalued or overvalued?
With the current market price at $42.51, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate STMicroelectronics NV's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 5.2% | 6.2% |
| Adjusted beta | 0.89 | 1.22 |
| Cost of equity | 7.8% | 11.7% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 12.2% | 13.1% |
| Debt/Equity ratio | 0.07 | 0.07 |
| After-tax WACC | 7.5% | 11.2% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $61 | $54,765M | 71.4% |
| 10-Year Growth | $64 | $57,543M | 50.5% |
| 5-Year EBITDA | $54 | $48,294M | 67.6% |
| 10-Year EBITDA | $59 | $52,911M | 46.2% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $1,048M |
| Discount Rate (WACC) | 11.2% - 7.5% |
| Enterprise Value | $9,353M - $13,983M |
| Net Debt | $(686)M |
| Equity Value | $10,039M - $14,669M |
| Outstanding Shares | 903M |
| Fair Value | $11 - $16 |
| Selected Fair Value | $12.78 |
| Metric | Value |
|---|---|
| Market Capitalization | $38393M |
| Enterprise Value | $37789M |
| Trailing P/E | 10.09 |
| Forward P/E | 9.82 |
| Trailing EV/EBITDA | 5.70 |
| Current Dividend Yield | 51.61% |
| Dividend Growth Rate (5Y) | -1.07% |
| Debt-to-Equity Ratio | 0.07 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $18.08 |
| Discounted Cash Flow (5Y) | 25% | $14.35 |
| Dividend Discount Model (Multi-Stage) | 20% | $9.01 |
| Dividend Discount Model (Stable) | 15% | $8.52 |
| Earnings Power Value | 10% | $1.28 |
| Weighted Average | 100% | $51.24 |
Based on our comprehensive valuation analysis, STMicroelectronics NV's weighted average intrinsic value is $51.24, which is approximately 20.5% above the current market price of $42.51.
Key investment considerations:
Given these factors, we believe STMicroelectronics NV is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.