Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Western Digital Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 31.4% to -19.4% 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 65, DPO 83, DIO 136). At a 9.3% WACC with mid-year discounting, the terminal value (98% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 23.8x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $90.85 per share, suggesting WDC is overvalued by 67.2% at the current price of $277.14.
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 | 464 | 589 | 690 | 726 | 586 | 600 |
| (−) Net Interest | 470 | 597 | 699 | 736 | 593 | 608 |
| (+) D&A | 762 | 745 | 757 | 868 | 1,058 | 1,084 |
| EBITDA | 1,697 | 1,931 | 2,145 | 2,330 | 2,237 | 2,293 |
| (−) Tax | 0 | 0 | 0 | 0 | 0 | — |
| (−) CapEx | 918 | 1,164 | 1,364 | 1,436 | 1,158 | — |
| (−) ΔWC | 1,998 | 941 | 763 | 276 | -1,064 | — |
| Free Cash Flow (FCF) | -1,219 | -175 | 18 | 618 | 2,143 | — |
| Peers' EBITDA Multiple | 23.8x | |||||
| Terminal Value | 54,475 | |||||
| WACC / Discount Rate | 9.25% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | -1,167 | -153 | 15 | 453 | 1,439 | 35,001 |
| Enterprise Value | 35,588 | |||||
| Projection Period | 587 | 1.6% | ||||
| Terminal Value | 35,001 | 98.4% | ||||
| (−) Current Net Debt | 2,967 | |||||
| Equity Value | 32,621 | |||||
| (÷) Outstanding Shares | 359M | |||||
| Fair Price | $91 | -67.2% | ||||
| WACC \ EV/EBITDA Exit Multiple | 19.8x | 21.8x | 23.8x | 25.8x | 27.8x |
|---|---|---|---|---|---|
| 7.3% | $83 | $92 | $101 | $110 | $119 |
| 8.3% | $78 | $87 | $96 | $104 | $113 |
| 9.3% | $74 | $83 | $91 | $99 | $107 |
| 10.3% | $71 | $78 | $86 | $94 | $102 |
| 11.3% | $67 | $75 | $82 | $90 | $97 |
Current price: $277.14. 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.