QS Research · Michael Burry's Scion Capital analyst template · 2006
Seagate Technology Holdings plc (STX)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case -4% · downside -36% · upside +25%
The market is not missing the earnings — it is paying 24.1x TTM P/E (N31) and 18.6x EV/EBITDA (N28) for a business whose FY2021-FY2026 cycle averaged $1.24B of net income and $1.27B of normalized FCF (S2), which puts today's $105.83B market cap (N9) at 85x average earnings and a 1.2% normalized FCF yield. The operating news is genuinely good — FQ1 2027 revenue $4,233M, 57.3% gross margin, $1,761M net income, $1.5B FCF, and FQ2 2027 guided to $4.8B revenue and $9.20 non-GAAP EPS (S29, S31) — but that is peak-cycle pricing power, not a proven new margin floor, and the balance sheet is thin (net debt $1.12B, equity $3.45B, price/book 30.65x; N24, N25, N33) so the equity carries the whole swing. I therefore do not normalize the base case (the newest TTM period is the base, per section 13) but I hold the multiple at today's 18.6x EV/EBITDA rather than granting a re-rating, because no cited catalyst other than the valuation itself justifies a higher multiple. Base case is roughly flat to modestly down, downside on cycle reversion is -36% to -86%, and upside needs 25% earnings growth with the premium retained — the rule is not met either way, so this is a watch, not a long.
Key numbers
- Share price: $460.99
- Market cap: $105.83B
- Latest financial period: TTM to Oct 2, 2026
- Revenue (TTM): $13.80B
- EV / EBITDA (TTM): 18.6x
- P/E (TTM): 24.1x
- Price / book: 30.65x
The 15 boxes
- ✓ 1. Long-form business notes
Seagate makes most of its money selling mass-capacity HDDs and storage systems into Data Center, with Edge IoT a smaller, seasonal outlet; the latest 10-K lists Data Center products up to 44TB and Edge IoT products from 1TB to 32TB. The FY2021 10-K described a broader portfolio including SSDs, SSHDs, storage subsystems and Lyve, while the latest 10-K organizes the business around Data Center and Edge IoT. Revenue is cyclical: $11.66B in FY2022 fell to $7.38B in FY2023 and rose to $12.20B in FY2026, with operating income -$342.0M in FY2023 and $4.09B in FY2026.
- ✓ 2. Competitive advantage
The advantage Seagate claims is technology and scale: in-house read/write heads and media, an areal-density/HAMR (Mozaic) roadmap, and a patent estate — not evidence of pricing power. The six-year record is brutally cyclical, with operating margin running from 16.8% (FY2022) to -4.6% (FY2023) and back to 33.5% (FY2026). It competes head-on with Western Digital, Toshiba and NAND flash suppliers, and derives the vast majority of business from Data Center. The most durable thing the sources show is cash: operating cash flow stayed positive ($942.0M FY2023, $918.0M FY2024) through the trough years.
- ✓ 3. 10-Q takeaways
The September 2026 quarter (FQ1 2027, ended 2026-10-02) was a pricing-led step-up: revenue $4,233 million, gross margin 57.3%, operating income $2,064 million, net income $1,761 million and GAAP diluted EPS $7.59, all far above both the June 2026 quarter ($3,629 million revenue, 52% gross margin) and the September 2025 quarter ($2,629 million, 39.4%), which was a 14-week quarter versus 13 weeks this year. The quarter generated $1,690 million of operating cash flow but cash still fell $446 million to $1,258 million because $1.8 billion went out in financing: $1,262 million of debt redemption, $400 million of buybacks and $168 million of dividends. Guidance is numeric and up sharply: FQ2 2027 revenue of $4.8 billion ±$100 million and non-GAAP diluted EPS of $9.20 ±$0.20. The only one-off in the P&L is a $44 million net loss from debt transactions inside other expense, which reduced rather than flattered net income.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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