Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Applied Materials, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 10.7% to 5.3% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 79, DPO 44, DIO 144). At a 9.2% WACC with mid-year discounting, the terminal value (88% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 23.3x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $340.06 per share, suggesting AMAT is fairly valued by 0.0% at the current price of $339.97.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 9,070 | 10,825 | 11,895 | 12,738 | 13,415 | 13,750 |
| (−) Net Interest | 293 | 349 | 384 | 411 | 433 | 444 |
| (+) D&A | 1,202 | 1,351 | 1,530 | 1,679 | 1,837 | 1,883 |
| EBITDA | 10,565 | 12,525 | 13,810 | 14,828 | 15,685 | 16,077 |
| (−) Tax | 1,357 | 1,619 | 1,779 | 1,906 | 2,007 | — |
| (−) CapEx | 1,411 | 1,684 | 1,850 | 1,982 | 2,087 | — |
| (−) ΔWC | 2,058 | 2,192 | 1,337 | 1,053 | 845 | — |
| Free Cash Flow (FCF) | 5,739 | 7,030 | 8,843 | 9,889 | 10,747 | — |
| Peers' EBITDA Multiple | 23.3x | |||||
| Terminal Value | 374,925 | |||||
| WACC / Discount Rate | 9.21% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 5,492 | 6,160 | 7,095 | 7,265 | 7,230 | 241,366 |
| Enterprise Value | 274,609 | |||||
| Projection Period | 33,242 | 12.1% | ||||
| Terminal Value | 241,366 | 87.9% | ||||
| (−) Current Net Debt | (191) | |||||
| Equity Value | 274,800 | |||||
| (÷) Outstanding Shares | 808M | |||||
| Fair Price | $340 | +0.0% | ||||
| WACC \ EV/EBITDA Exit Multiple | 19.3x | 21.3x | 23.3x | 25.3x | 27.3x |
|---|---|---|---|---|---|
| 7.2% | $315 | $343 | $371 | $399 | $427 |
| 8.2% | $301 | $328 | $355 | $382 | $409 |
| 9.2% | $289 | $314 | $340 | $366 | $391 |
| 10.2% | $277 | $301 | $326 | $350 | $375 |
| 11.2% | $265 | $289 | $312 | $336 | $359 |
Current price: $339.97. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.