Does GlobalFoundries Stock Merit Attention After Its Recent 11% Rebound?

• If you are wondering whether GlobalFoundries is quietly turning into a value opportunity, or if it is still a trap for patient investors, this article will walk you through what the current price really implies.
• After a choppy year where the stock is down about 12.2% over the last 12 months and 13.8% year to date, the recent 11.2% gain over the past month, despite a 5.4% dip in the last week, suggests that sentiment may be starting to shift again.
• Recent headlines around the semiconductor supply chain, geopolitical incentives for onshore chip production, and GlobalFoundries positioning as a specialty foundry player have all helped refocus attention on its long term role in the industry. At the same time, investor debate has intensified over whether its capacity expansion plans and customer mix justify a richer multiple or call for more caution.
• On our framework, GlobalFoundries scores a modest 2 out of 6 on undervaluation checks. We will therefore explore what traditional valuation approaches say about the stock today and introduce a more powerful way to think about its fair value that we will return to at the end.

GlobalFoundries scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: GlobalFoundries Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a company is worth today by projecting the cash it can generate in the future and discounting those cash flows back to the present.

For GlobalFoundries, the latest twelve month free cash flow is about $561 million. Analysts and extrapolated estimates see this rising to around $1.45 billion by 2028, with longer term projections reaching roughly $1.64 billion by 2035. These figures reflect expectations that GlobalFoundries will steadily scale its cash generation as capacity ramps and utilization improves, even though some of the later year numbers are Simply Wall St extrapolations rather than direct analyst forecasts.

When all those future cash flows are discounted back using a 2 Stage Free Cash Flow to Equity approach, the model arrives at an intrinsic value of about $29.91 per share. Compared with the current share price, this implies the stock is roughly 22.4% overvalued on this framework. This suggests investors are already paying up for a bullish long term scenario.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests GlobalFoundries may be overvalued by 22.4%. Discover 914 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for GlobalFoundries.

Approach 2: GlobalFoundries Price vs Sales

For companies that are still normalizing profitability but already generating meaningful revenue, the price to sales ratio is often the cleanest way to compare what investors are paying for each dollar of business today, before margins fully mature. Higher growth and lower perceived risk typically justify a richer multiple, while slower growth or more uncertainty point to a more modest valuation being appropriate.

GlobalFoundries currently trades on a price to sales multiple of about 3.0x, which is below the broader Semiconductor industry average of roughly 5.3x and well under the peer group average of around 8.9x. Simply Wall St’s proprietary Fair Ratio framework goes a step further by estimating what a “normal” price to sales multiple should be for GlobalFoundries, given its growth outlook, profitability profile, risks, industry position and market cap. On this basis, its Fair Ratio is 2.4x, suggesting that, after adjusting for these fundamentals, the stock is actually pricing in slightly more optimism than the model would imply.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your GlobalFoundries Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple framework that connects the story you believe about GlobalFoundries with the numbers that sit behind your investment decision. A Narrative is your own, clearly stated view of how the business will evolve, translated into assumptions about future revenue, earnings and margins, which then flow into a financial forecast and, ultimately, a Fair Value estimate. On Simply Wall St, Narratives live in the Community page used by millions of investors, where you can quickly compare your Fair Value to the current share price to consider whether GlobalFoundries looks like a buy, hold or sell, and watch your Narrative update dynamically as new earnings, guidance or news arrives. For example, one GlobalFoundries Narrative might lean bullish, assuming revenue reaches about $8.6 billion and earnings $1.4 billion by 2028 to support a Fair Value near $50 per share, while a more cautious Narrative, focused on capital intensity and competitive risks, might instead anchor on the lower $35 target and more muted profitability assumptions.

Do you think there's more to the story for GlobalFoundries? Head over to our Community to see what others are saying!

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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