Can Seagate’s Stock Sustain Growth After Surging 151.8% Amid AI Data Storage Boom?

Wondering what to do with Seagate Technology Holdings stock? You are not alone. After a jaw-dropping rally, up 151.8% year to date and a whopping 427.7% over the past five years, any investor could be excused for wondering whether there is still room to grow, or whether caution is now the wiser path. Even with a modest dip of -1.7% in the last week, the stock still shows long-term momentum few can ignore. Recent movements seem to reflect shifting attitudes about Seagate’s growth prospects, especially as demand for advanced data storage solutions heats up across tech and AI-driven industries. That said, questions about its current valuation are starting to swirl more loudly as returns soar.

Looking at the valuation numbers, Seagate clocks in with a value score of just 1 out of 6. This means it only appears undervalued by a single measure out of several we track. This mixed result may surprise some, given the pace of its share price gains, and underscores why a closer look is worth your time. In the next section, we will break down each valuation approach, exploring what they reveal and what they are missing. Stick around, because at the end, we will introduce a more holistic way to size up Seagate’s true value beyond the usual metrics.

Seagate Technology Holdings scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Seagate Technology Holdings Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting its future cash flows, then discounting them back to their value today. This approach is widely used for stocks like Seagate Technology Holdings because it focuses on how much actual cash the business can generate for shareholders over time.

Seagate’s current Free Cash Flow stands at $753 Million. According to analyst forecasts, cash flow is expected to grow significantly over the next few years, with estimates rising to $2.7 Billion annually by 2030. These initial projections, provided by analysts through 2028, are then further extrapolated by Simply Wall St to cover the next decade.

Based on the 2 Stage Free Cash Flow to Equity DCF model, Seagate’s intrinsic value comes out to $230.02 per share. This figure implies the stock is trading at a 5.4% discount compared to its fair value according to the DCF method. It suggests that, at current prices, the market sees Seagate as being about fairly valued when considering reasonable assumptions for future growth and profitability.

Result: ABOUT RIGHT

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

Simply Wall St performs a valuation analysis on every stock in the world every day (check out Seagate Technology Holdings's valuation analysis). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes.

Approach 2: Seagate Technology Holdings Price vs Earnings

The Price-to-Earnings (PE) ratio is one of the most widely used metrics for valuing profitable companies, as it allows investors to compare a company’s stock price to its actual earnings power. For companies generating reliable profits like Seagate Technology Holdings, the PE ratio is a quick way to gauge whether shares are priced reasonably relative to how much money the business is making.

It is important to note that what counts as a “normal” or “fair” PE ratio depends on several factors. Companies expected to grow earnings faster, or those seen as less risky, can justify higher PE multiples. In contrast, slower growers or riskier firms usually trade at lower ratios. Thus, simply comparing PE ratios across companies or industries only tells part of the story.

Seagate currently trades at a PE ratio of 31.5x. This is higher than both the industry average of 23.9x and the average of its peer group at 19.7x. However, rather than relying only on these benchmarks, Simply Wall St’s proprietary "Fair Ratio" for Seagate is 31.3x. This Fair Ratio takes into account Seagate’s unique mix of growth, profit margin, market cap, and risk profile, resulting in a target multiple tailored for the company’s specific situation. Because the actual PE ratio is almost equal to the Fair Ratio, this suggests that Seagate’s share price is in line with what fundamentals and future expectations warrant.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Seagate Technology Holdings Narrative

Earlier, we mentioned that there is an even better way to understand a company’s valuation, so let's introduce you to Narratives. A Narrative is a simple, powerful tool that lets you build your own story about a company by tying together your beliefs about Seagate’s future and the numbers behind them, such as revenue growth, profit margins, and fair value estimates.

Instead of relying on static metrics alone, Narratives link your expectations for Seagate’s business, such as how fast Mozaic drives or cloud demand could boost earnings, to financial forecasts and then translate those into a fair value you can act on. Narratives are easily built and shared by investors right inside Simply Wall St’s Community page. This gives millions of users a smarter and more flexible way to invest.

This approach empowers you to decide if it is time to buy or sell by directly comparing your Narrative’s fair value with today’s share price. Every Narrative is kept up-to-date automatically as new information emerges, from earnings reports to industry news, so your view remains relevant in any market environment.

For example, recently analyst Narratives for Seagate Technology Holdings ranged from a bullish price of $200, reflecting confidence in rapid growth and margin expansion, down to a cautious $80, showing how different perspectives translate to different valuations and decisions.

Do you think there's more to the story for Seagate Technology Holdings? Create your own Narrative to let the Community know!

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com