Stock Analysis on Net
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Stock Analysis on Net

Micron Technology Inc. (NASDAQ:MU)

Present Value of Free Cash Flow to the Firm (FCFF)

Microsoft Excel

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to the firm (FCFF) is generally described as cash flows after direct costs and before any payments to capital suppliers.

Intrinsic Stock Value (Valuation Summary)

Micron Technology Inc., free cash flow to the firm (FCFF) forecast

US$ in millions, except per share data

Microsoft Excel
Year Value FCFFt or Terminal value (TVt) Calculation Present value at 30.78%
01 FCFF0 59,457
1 FCFF1 63,148 = 59,457 × (1 + 6.21%) 48,286
2 FCFF2 69,494 = 63,148 × (1 + 10.05%) 40,633
3 FCFF3 79,147 = 69,494 × (1 + 13.89%) 35,386
4 FCFF4 93,182 = 79,147 × (1 + 17.73%) 31,857
5 FCFF5 113,286 = 93,182 × (1 + 21.57%) 29,615
5 Terminal value (TV5) 1,496,647 = 113,286 × (1 + 21.57%) ÷ (30.78% – 21.57%) 391,251
Intrinsic value of Micron Technology Inc. capital 577,029
Less: Debt (fair value) 4,817
Intrinsic value of Micron Technology Inc. common stock 572,212
 
Intrinsic value of Micron Technology Inc. common stock (per share) $505.75
Current share price $690.00

Based on: 10-K (reporting date: 2026-09-03).

1 See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Weighted Average Cost of Capital (WACC)

Micron Technology Inc., cost of capital

Microsoft Excel
Value1 Weight Required rate of return2 Calculation
Equity (fair value) 780,682 0.99 30.95%
Debt (fair value) 4,817 0.01 3.59% = 4.30% × (1 – 16.57%)

Based on: 10-K (reporting date: 2026-09-03).

1 US$ in millions

   Equity (fair value) = No. shares of common stock outstanding × Current share price
= 1,131,423,212 × $690.00
= $780,682,016,280.00

   Debt (fair value). See details »

2 Required rate of return on equity is estimated by using CAPM. See details »

   Required rate of return on debt. See details »

   Required rate of return on debt is after tax.

   Estimated (average) effective income tax rate
= (14.80% + 11.60% + 36.40% + 21.00% + 9.30% + 6.30%) ÷ 6
= 16.57%

WACC = 30.78%

FCFF Growth Rate (g)

FCFF growth rate (g) implied by PRAT model

Micron Technology Inc., PRAT model

Microsoft Excel
Average Sep 3, 2026 Aug 28, 2025 Aug 29, 2024 Aug 31, 2023 Sep 1, 2022 Sep 2, 2021
Selected Financial Data (US$ in millions)
Interest expense 106 477 562 388 189 183
Net income (loss) 84,969 8,539 778 (5,833) 8,687 5,861
 
Effective income tax rate (EITR)1 14.80% 11.60% 36.40% 21.00% 9.30% 6.30%
 
Interest expense, after tax2 90 422 357 307 171 171
Add: Dividends and dividend equivalents declared 608 527 518 509 352 112
Interest expense (after tax) and dividends 698 949 875 816 523 283
 
EBIT(1 – EITR)3 85,059 8,961 1,135 (5,526) 8,858 6,032
 
Current debt 491 560 431 278 103 155
Long-term debt 4,688 14,017 12,966 13,052 6,803 6,621
Shareholders’ equity 138,378 54,165 45,131 44,120 49,907 43,933
Total capital 143,557 68,742 58,528 57,450 56,813 50,709
Financial Ratios
Retention rate (RR)4 0.99 0.89 0.23 — 0.94 0.95
Return on invested capital (ROIC)5 59.25% 13.04% 1.94% -9.62% 15.59% 11.90%
Averages
RR 0.94
ROIC 6.57%
 
FCFF growth rate (g)6 6.21%

Based on: 10-K (reporting date: 2026-09-03), 10-K (reporting date: 2025-08-28), 10-K (reporting date: 2024-08-29), 10-K (reporting date: 2023-08-31), 10-K (reporting date: 2022-09-01), 10-K (reporting date: 2021-09-02).

1 See details »

2026 Calculations

2 Interest expense, after tax = Interest expense × (1 – EITR)
= 106 × (1 – 14.80%)
= 90

3 EBIT(1 – EITR) = Net income (loss) + Interest expense, after tax
= 84,969 + 90
= 85,059

4 RR = [EBIT(1 – EITR) – Interest expense (after tax) and dividends] ÷ EBIT(1 – EITR)
= [85,059 – 698] ÷ 85,059
= 0.99

5 ROIC = 100 × EBIT(1 – EITR) ÷ Total capital
= 100 × 85,059 ÷ 143,557
= 59.25%

6 g = RR × ROIC
= 0.94 × 6.57%
= 6.21%

FCFF growth rate (g) implied by single-stage model

g = 100 × (Total capital, fair value0 × WACC – FCFF0) ÷ (Total capital, fair value0 + FCFF0)
= 100 × (785,499 × 30.78% – 59,457) ÷ (785,499 + 59,457)
= 21.57%

where:

Total capital, fair value0 = current fair value of Micron Technology Inc. debt and equity (US$ in millions)
FCFF0 = the last year Micron Technology Inc. free cash flow to the firm (US$ in millions)
WACC = weighted average cost of Micron Technology Inc. capital

FCFF growth rate (g) forecast

Micron Technology Inc., H-model

Microsoft Excel
Year Value gt
1 g1 6.21%
2 g2 10.05%
3 g3 13.89%
4 g4 17.73%
5 and thereafter g5 21.57%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpolation between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= 6.21% + (21.57% – 6.21%) × (2 – 1) ÷ (5 – 1)
= 10.05%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 6.21% + (21.57% – 6.21%) × (3 – 1) ÷ (5 – 1)
= 13.89%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 6.21% + (21.57% – 6.21%) × (4 – 1) ÷ (5 – 1)
= 17.73%