Research HubSoftware & Cloud ServicesSTMicroelectronics N.V. (STM)

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SEC 10-K / 10-Q Equity ResearchSoftware & Cloud ServicesTicker: STM

STMicroelectronics N.V. (STM) DCF Valuation & Fundamental Primer

STMicroelectronics N.V. (STM) currently trades at $27.41 with an enterprise value of $-3.53B. Our proprietary institutional model rates STMicroelectronics N.V. at 44/100 (Grade: C · Capital Intensive / Low Margin). The current market price prices in an implied 5-year revenue CAGR of 0.8% vs. historical growth of 6.7% (Fairly Priced to Fundamentals).

GDA Quality Score

C44/100

Capital Intensive / Low Margin

Share Price / DCF Base

$27.41 / -$4.95

Enterprise Value

$25.34B

TTM Revenue

$13.27B (+6.7%)

Gross Margin

39.3%

Rule of 40 Score

5.1%

EV / TTM Revenue

1.9×

Structural Moat: Enterprise Software & Cloud Services Switching Costs & Recurring Workflow Integration

Key Growth Catalyst: AI workflow automation, multi-module expansion across enterprise cohorts, and operating margin leverage at STMicroelectronics N.V..

Institutional fundamental teardown of STMicroelectronics N.V. (STM) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.

Seed STM in Interactive 3-Statement Model

Section 1 · Intrinsic Valuation Engine

STMicroelectronics N.V. (STM) 3-Scenario DCF Valuation Range

WACC: 10.0% · Terminal Growth: 2.5% · Diluted Shares: 892.3M

bear Case DCFSensitivity

-$3.22

Implied Equity Value:$-2.88B

base Case DCFPrimary Benchmark

-$4.95

Implied Equity Value:$-4.42B

bull Case DCFSensitivity

-$6.92

Implied Equity Value:$-6.17B

Interactive What-If DCF SandboxSim Rule of 40: 16.7%

Stress-test STM's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.

Seed Custom Drivers in /model

1-Click Regimes:

5Y Revenue CAGR6.7%

2%Hist: 6.7%50%

Target FCF Margin10.0%

5%Base: 10%45%

WACC Discount Rate10.0%

6.5%Base: 10%14.5%

Terminal Growth (g)2.5%

1.0%Implies 13.7× Y5 FCF4.0%

Accounting Lens:

Simulated Implied Price$23.25

Spread vs Market-15.2%

Simulated EV$21.63B

Effective FCF Margin10.0%

Simulated 5-Year Cash Flow Trajectory (Unlevered FCF vs. Discounted PV)Cumulative 5Y PV: $6.06B

Year 1$14.16B

FCF:$1.42B

PV:$1.29B

Year 2$15.11B

FCF:$1.51B

PV:$1.25B

Year 3$16.12B

FCF:$1.61B

PV:$1.21B

Year 4$17.20B

FCF:$1.72B

PV:$1.17B

Year 5$18.35B

FCF:$1.84B

PV:$1.14B

Enterprise Value Composition Bridge$21.63B

Split between 5-Year Explicit Cash Flows and Discounted Terminal Value

5Y Explicit PV: $6.06B (28.0%)Terminal PV: $15.57B (72.0%)

(+) Balance Sheet Cash & Equivalents+$2.28B

(−) Total Debt Obligations−$3.17B

(=) Implied Equity Value (892.3M shs)$20.75B

2D Institutional Valuation Sensitivity Heatmap

Implied share price & upside/downside spread across 25 valuation states (Current Price: $27.41).

WACC \ Terminal	1.5%	2.0%	2.5%	3.0%	3.5%
8.5%	$25.91 -5%	$27.54 +0%	$29.45 +7%	$31.69 +16%	$34.39 +25%
9.3%	$23.24 -15%	$24.53 -11%	$26.00 -5%	$27.71 +1%	$29.72 +8%
10.0%	$21.05 -23%	$22.08 -19%	$23.25 -15%	$24.59 -10%	$26.13 -5%
10.8%	$19.21 -30%	$20.05 -27%	$21.00 -23%	$22.07 -19%	$23.29 -15%
11.5%	$17.65 -36%	$18.35 -33%	$19.13 -30%	$20.00 -27%	$20.98 -23%

Section 2 · Fundamental Underwriting

Institutional Software Quality Scorecard (44/100 · Grade C)

Capital Intensive / Low Margin

Weak cash conversion, substantial dilution drag, or constrained financial flexibility.

Cash Conversion5 / 25

Actual: -13% of EBITTarget: Target: ≥100%

Negative free cash flow; business consumes cash to sustain operations

Dilution Friction25 / 25

Actual: 1.7% of RevTarget: Target: ≤8%

Minimal dilution friction; management compensation aligned with shareholders

Unit Economics8 / 25

Actual: 39% GM / R40: 5%Target: Target: ≥75% GM / ≥40% R40

Sub-par gross margins; higher cost of delivery or hardware/services mix

Balance Sheet6 / 25

Actual: -$885.0M Net DebtTarget: Target: Net Cash > 0

Leveraged balance sheet coupled with cash burn; heightened refinancing risk

Core Investment Strengths & Moats

Low dilution friction: SBC is only 1.7% of revenue

Key Operational & Dilution Risks

Negative free cash flow burn of $-216.0M over trailing twelve months
Lower software gross margins (39.3%), indicating higher hosting or service delivery drag
Balance sheet vulnerability: Net debt of $885.0M while operating with cash burn

Section 3 · Expectations Investing

Reverse-DCF Solver: What Growth is Priced Into STM?

Fairly Priced to Fundamentals

Market implies 0.8% annual revenue growth over next 5 years (2.4% dilution-adjusted), in line with company run-rate.

Implied 5-Year Revenue CAGR

0.8%

Required to justify $25.34B EV

Historical Run-Rate CAGR

6.7%

Audited multi-year top-line trajectory

Growth Hurdle Spread

-5.9%

Implied hurdle minus historical growth

Implied FCF Margin @ Hist. Growth

11.7%

Steady-state FCF margin needed at current CAGR

Institutional Dilution-Adjusted Hurdle Lens

Headline Reverse-DCF ignores Stock-Based Compensation (1.7% of revenue) and annual share dilution (0.2%/yr). Accounting for both requires 2.4% 5-year revenue CAGR to justify $27.41/sh on a true per-share economic cash flow basis.

True Economic Hurdle2.4%

SBC & Dilution Hurdle Tax+1.6% / yr

Section 4 · 5-Year Forecast Schedule

STMicroelectronics N.V. (STM) 5-Year Fundamental Forecast

Customize in Live Engine

Statement Line Item	TTM Audited Base	TTM	Y1	Y2	Y3	Y4	Y5
Revenue	$13.27B	$13.27B	$14.16B	$15.12B	$16.14B	$17.23B	$18.39B
Gross Profit	$5.22B	$5.22B	$5.57B	$5.95B	$6.35B	$6.78B	$7.24B
Operating Income (EBIT)	$1.68B	$1.68B	$1.79B	$1.91B	$2.04B	$2.18B	$2.32B
Stock-Based Compensation (SBC)	$222.0M	$221.6M	$236.5M	$252.5M	$269.6M	$287.8M	$307.2M
Unlevered Free Cash Flow (FCF)	$-216.0M	$-216.3M	$-230.9M	$-246.5M	$-263.1M	$-280.9M	$-299.8M
SBC-Adjusted True Cash Flow	$-438.0M	$-437.9M	$-467.4M	$-499.0M	$-532.7M	$-568.6M	$-607.0M

Section 5 · Relative Valuation Multiples & Regression

Software & Cloud Services Peer Comparables & Rule of 40 Regression

Click any peer node or ticker to open its dedicated equity research report

Rule of 40 vs. EV / Revenue Multiple Regression

OLS Fit: EV/Rev = -2.1 + 0.28 × (Rule of 40) · R² = 59%

Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.

STM Actual vs. Reg. Multiple1.9× vs 2.0× fair

Reg.-Implied Share Price$28.75 (4.5% Discount)

STMSTMicroelectronics N.V.·Rule of 40: 5.1%·Actual EV/Rev: 1.9×·Regression Fair Multiple: 2.0×

4.5% Below Trendline (Attractive)Open STM Report

Company	Ticker	Market Cap	TTM Revenue	Gross Margin	FCF Margin	Rule of 40	SBC % Rev	EV / Rev
STMicroelectronics N.V.	STM	$24.46B	$13.27B	39.3%	-1.6%	5.1%	1.7%	1.9×
ServiceNow	NOW	$152.61B	$10.98B	79.2%	31.1%	54.2%	15.9%	13.9×
Workday, Inc.	WDAY	$50.35B	$8.00B	75.0%	27.4%	43.9%	19.0%	6.4×
Salesforce	CRM	$217.10B	$37.90B	77.2%	32.8%	42.8%	8.4%	5.8×
Datadog	DDOG	$46.05B	$2.68B	80.8%	31.1%	57.7%	21.3%	17.4×
Snowflake Inc.	SNOW	$71.79B	$3.63B	66.5%	25.2%	57.7%	40.8%	20.0×
Hubspot	HUBS	$19.89B	$2.63B	85.0%	21.3%	52.7%	19.2%	7.7×
Peer Cohort Median Benchmark (N=6)				78.2%	29.2%	53.5%	19.1%	10.8×

Section 6 · Downside Protection & Multiple Sensitivity

EV / Revenue Multiple Compression Stress Test

Multiple Scenario	EV / Revenue	Implied Enterprise Value	Implied Equity Value	Implied Share Price	Delta vs Current
Current Multiple	1.9×	$25.34B	$24.46B	$27.41	0.0%
-20% Multiple Compression	1.5×	$20.27B	$19.39B	$21.73	-20.0%
-35% Multiple Compression	1.2×	$16.47B	$15.59B	$17.47	-35.0%
Software Baseline Floor (5.0× EV/Rev)	5.0×	$66.35B	$65.46B	$73.36	+161.8%

Section 7 · Investor Diligence FAQ

Frequently Asked Questions: STMicroelectronics N.V. (STM) Valuation

What is STMicroelectronics N.V. (STM)'s intrinsic DCF valuation and implied share price?

Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, STMicroelectronics N.V. (STM) has a Base Case implied value of -$4.95 per share (with a Bear Case of -$3.22 and a Bull Case of -$6.92), compared to its current price of $27.41. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.

What is STMicroelectronics N.V. (STM)'s Rule of 40 score and Free Cash Flow margin?

STMicroelectronics N.V. achieves a Rule of 40 score of 5.1%, combining a 6.7% revenue growth run-rate with a -1.6% TTM free cash flow margin on $13.27B in trailing twelve-month revenue. In the Software & Cloud Services peer cohort, the median Rule of 40 benchmark is 53.5%.

What revenue growth rate is priced into STM stock according to Reverse-DCF analysis?

At $27.41 per share (Enterprise Value of $25.34B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 0.8%, compared to STMicroelectronics N.V.'s historical CAGR of 6.7%. Overall market expectations are rated as "Fairly Priced to Fundamentals".

How does STMicroelectronics N.V. compare to Software & Cloud Services software peers?

STMicroelectronics N.V. (STM) earns an institutional Software Quality Score of 44/100 (Grade C — Capital Intensive / Low Margin). Across its Software & Cloud Services peer group (NOW, WDAY, CRM, DDOG, SNOW), the cohort trades at a median EV/TTM Revenue multiple of 10.8× and a median gross margin of 78.2%.

How does Stock-Based Compensation (SBC) impact STMicroelectronics N.V. (STM)'s valuation?

STMicroelectronics N.V. recorded $222.0M in TTM stock-based compensation (1.7% of revenue). When treating SBC as a cash-equivalent compensation expense, STMicroelectronics N.V.'s SBC-adjusted free cash flow yield is -1.8%, scoring 25/25 on our Shareholder Dilution Friction pillar.

STMicroelectronics N.V. (STM) DCF Valuation & Fundamental Primer

WACC \ Terminal

1.5%

2.0%

2.5%

3.0%

3.5%

8.5%

$25.91

-5%

$27.54

+0%

$29.45

+7%

$31.69

+16%

$34.39

+25%

9.3%

$23.24

-15%

$24.53

-11%

$26.00

-5%

$27.71

+1%

$29.72

+8%

10.0%

$21.05

-23%

$22.08

-19%

$23.25

-15%

$24.59

-10%

$26.13

-5%

10.8%

$19.21

-30%

$20.05

-27%

$21.00

-23%

$22.07

-19%

$23.29

-15%

11.5%

$17.65

-36%

$18.35

-33%

$19.13

-30%

$20.00

-27%

$20.98

-23%

Statement Line Item

TTM Audited Base

TTM

Revenue

$13.27B

$14.16B

$15.12B

$16.14B

$17.23B

$18.39B

Gross Profit

$5.22B

$5.57B

$5.95B

$6.35B

$6.78B

$7.24B

Operating Income (EBIT)

$1.68B

$1.79B

$1.91B

$2.04B

$2.18B

$2.32B

Stock-Based Compensation (SBC)

$222.0M

$221.6M

$236.5M

$252.5M

$269.6M

$287.8M

$307.2M

Unlevered Free Cash Flow (FCF)

$-216.0M

$-216.3M

$-230.9M

$-246.5M

$-263.1M

$-280.9M

$-299.8M

SBC-Adjusted True Cash Flow

$-438.0M

$-437.9M

$-467.4M

$-499.0M

$-532.7M

$-568.6M

$-607.0M

Company

Ticker

Market Cap

TTM Revenue

Gross Margin

FCF Margin

Rule of 40

SBC % Rev

EV / Rev

STMicroelectronics N.V.

STM

$24.46B

$13.27B

39.3%

-1.6%

5.1%

1.7%

1.9×

ServiceNow

NOW

$152.61B

$10.98B

79.2%

31.1%

54.2%

15.9%

13.9×

Workday, Inc.

WDAY

$50.35B

$8.00B

75.0%

27.4%

43.9%

19.0%

6.4×

Salesforce

CRM

$217.10B

$37.90B

77.2%

32.8%

42.8%

8.4%

5.8×

Datadog

DDOG

$46.05B

$2.68B

80.8%

31.1%

57.7%

21.3%

17.4×

Snowflake Inc.

SNOW

$71.79B

$3.63B

66.5%

25.2%

57.7%

40.8%

20.0×

Hubspot

HUBS

$19.89B

$2.63B

85.0%

21.3%

52.7%

19.2%

7.7×

Peer Cohort Median Benchmark (N=6)

78.2%

29.2%

53.5%

19.1%

10.8×

Multiple Scenario

EV / Revenue

Implied Enterprise Value

Implied Equity Value

Implied Share Price

Delta vs Current

Current Multiple

1.9×

$25.34B

$24.46B

$27.41

0.0%

-20% Multiple Compression

1.5×

$20.27B

$19.39B

$21.73

-20.0%

-35% Multiple Compression

1.2×

$16.47B

$15.59B

$17.47

-35.0%

Software Baseline Floor (5.0× EV/Rev)

5.0×

$66.35B

$65.46B

$73.36

+161.8%

STMicroelectronics N.V. (STM) 3-Scenario DCF Valuation Range

2D Institutional Valuation Sensitivity Heatmap

Institutional Software Quality Scorecard (44/100 · Grade C)

Core Investment Strengths & Moats

Key Operational & Dilution Risks

Reverse-DCF Solver: What Growth is Priced Into STM?

STMicroelectronics N.V. (STM) 5-Year Fundamental Forecast

Software & Cloud Services Peer Comparables & Rule of 40 Regression

Rule of 40 vs. EV / Revenue Multiple Regression

EV / Revenue Multiple Compression Stress Test

Frequently Asked Questions: STMicroelectronics N.V. (STM) Valuation

What is STMicroelectronics N.V. (STM)'s intrinsic DCF valuation and implied share price?

What is STMicroelectronics N.V. (STM)'s Rule of 40 score and Free Cash Flow margin?

What revenue growth rate is priced into STM stock according to Reverse-DCF analysis?

How does STMicroelectronics N.V. compare to Software & Cloud Services software peers?

How does Stock-Based Compensation (SBC) impact STMicroelectronics N.V. (STM)'s valuation?

Related Software & Cloud Services Equity Research Reports

STMicroelectronics N.V. (STM) 3-Scenario DCF Valuation Range

2D Institutional Valuation Sensitivity Heatmap

Institutional Software Quality Scorecard (44/100 · Grade C)

Core Investment Strengths & Moats

Key Operational & Dilution Risks

Reverse-DCF Solver: What Growth is Priced Into STM?

STMicroelectronics N.V. (STM) 5-Year Fundamental Forecast

Software & Cloud Services Peer Comparables & Rule of 40 Regression

Rule of 40 vs. EV / Revenue Multiple Regression

EV / Revenue Multiple Compression Stress Test

Frequently Asked Questions: STMicroelectronics N.V. (STM) Valuation

What is STMicroelectronics N.V. (STM)'s intrinsic DCF valuation and implied share price?

What is STMicroelectronics N.V. (STM)'s Rule of 40 score and Free Cash Flow margin?

What revenue growth rate is priced into STM stock according to Reverse-DCF analysis?

How does STMicroelectronics N.V. compare to Software & Cloud Services software peers?

How does Stock-Based Compensation (SBC) impact STMicroelectronics N.V. (STM)'s valuation?

Related Software & Cloud Services Equity Research Reports