Assessing ASML (ENXTAM:ASML) Valuation as Shares Reach Recent Highs

ASML Holding (ENXTAM:ASML) has delivered a total return of 42% for shareholders over the past month, drawing increased interest from investors. The company continues to see steady annual growth in both revenue and net income.

See our latest analysis for ASML Holding.

ASML Holding has continued to draw investor attention, as evidenced by its strong 1-year total shareholder return of 17% and a notable 3-year return close to 90%. While there have not been major headlines over the past month, momentum appears to be steadily building as a result of consistent business growth and optimism about long-term demand.

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But with shares hitting recent highs and growth expectations already robust, investors may wonder whether ASML is still trading at an attractive valuation or if the market has already priced in all the company’s future potential.

Most Popular Narrative: 12.2% Undervalued

According to Investingwilly, the narrative presents a fair value for ASML at €1,000, notably above the recent closing price of €877.6. This suggests that there could still be meaningful upside that the market may not have fully recognized yet.

ASML is the only company in the world producing EUV lithography tools. These machines are essential for making the world’s most powerful semiconductors. This gives ASML a near-monopoly in a fast-growing market driven by AI, 5G, and high-performance computing.

Read the complete narrative.

Is ASML’s valuation justified by its unique grip on advanced chipmaking and recurring revenue? Discover which bullish growth assumptions and gigantic margins fuel this bold price target. See how the narrative quantifies ASML’s future power play.

Result: Fair Value of €1,000 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, near-term risks such as ongoing geopolitical tensions and potential export restrictions to China could challenge the bullish outlook for ASML.

Find out about the key risks to this ASML Holding narrative.

Another View: Discounted Cash Flow Model Challenges the Upside

Taking a different approach, our DCF model arrives at a fair value of €660.74 for ASML, which is below the current market price of €877.6. This suggests the shares might be trading above what future cash flows can justify. Does this more cautious outlook signal a hidden risk for today’s buyers?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out ASML Holding for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own ASML Holding Narrative

If you’re not convinced by these narratives or want to dig deeper into the numbers yourself, you can quickly generate your own perspective on ASML with just a few clicks. Do it your way.

A great starting point for your ASML Holding research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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