Has NetApp’s Cloud Pivot Left Value on the Table at $119 in 2025?
- If you are wondering whether NetApp at around $119 a share is a hidden value play or a stock that has already run its course, you are not alone. This breakdown is designed to unpack exactly that question.
- The stock has quietly climbed 2.9% over the last week and 8.1% over the last month, yet it is only up 3.0% year to date and is actually down 1.4% over the past year, even after more than doubling over 3 and 5 years.
- Those mixed returns come as NetApp keeps sharpening its focus on cloud data services and AI friendly infrastructure, from expanding its partnerships with hyperscalers to rolling out new data management tools that address long term demand. At the same time, the market is reassessing traditional storage players as they pivot toward recurring, software driven revenue streams.
- Despite the skepticism reflected in that recent 1 year dip, NetApp scores a solid 5/6 valuation check for being undervalued on most of our metrics. That sets us up to walk through the usual valuation approaches next and then finish with an additional way to think about what this stock might really be worth.
Find out why NetApp's -1.4% return over the last year is lagging behind its peers.
Approach 1: NetApp Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow model estimates what a business is worth by projecting its future cash flows and then discounting them back to today in $ terms. For NetApp, we use a 2 Stage Free Cash Flow to Equity model that starts from its last twelve months free cash flow of about $1.68 billion and grows that stream forward.
Analysts and internal estimates see NetApp’s free cash flow rising gradually over the coming decade to around $2.65 billion by 2035, with near term forecasts out to 2028 supported by multiple analyst sources and later years extrapolated by Simply Wall St. Those future cash flows are then discounted to reflect risk and the time value of money, and summed to arrive at an intrinsic value per share.
On this basis, NetApp’s DCF fair value is roughly $185.65 a share versus a recent price near $119, which implies the stock is about 35.7% undervalued on cash flow fundamentals.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests NetApp is undervalued by 35.7%. Track this in your watchlist or portfolio, or discover 909 more undervalued stocks based on cash flows.
Approach 2: NetApp Price vs Earnings
For a consistently profitable business like NetApp, the price to earnings (PE) ratio is a practical way to gauge how much investors are paying for each dollar of earnings. In broad terms, faster growth and lower risk justify a higher PE, while slower or more volatile earnings usually warrant a lower multiple.
NetApp currently trades on a PE of about 20.1x, which sits below both the wider Tech sector average of roughly 22.7x and well under the peer group average near 64.3x. That gap might suggest a bargain at first glance, but simple comparisons can be misleading because they do not adjust for company specific growth prospects, margins, scale and risks.
Simply Wall St’s Fair Ratio tackles this by estimating what PE multiple NetApp should trade on, given its earnings growth profile, profitability, industry, market cap and risk factors. For NetApp, the Fair Ratio is around 25.3x, comfortably above the current 20.1x, which implies the market is pricing the stock more conservatively than its fundamentals suggest.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your NetApp Narrative
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple framework that lets you connect your view of NetApp’s story with concrete assumptions for its future revenue, earnings and margins, turning that story into a financial forecast and then into a Fair Value that you can easily compare with today’s share price to decide whether to buy, hold or sell. On Simply Wall St’s Community page, used by millions of investors, you can pick or create a Narrative for NetApp that reflects your perspective, whether you lean toward a more optimistic view that aligns with a higher fair value near 130 dollars or a more cautious stance closer to 100 dollars, and the platform will automatically translate those views into numbers and keep them up to date as new information, like earnings reports or product announcements, comes in.
Do you think there's more to the story for NetApp? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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