Sandisk is undervalued because market reaction after the report dropped on August 5 makes zero sense to me and I think we are looking at an easy 100% or 2x play here. Just to clear up any confusion on the timing, while this covers the second calendar quarter of 2026 ending July 3, Sandisk officially labels this as their fiscal fourth quarter and full year 2026 in their SEC 10-K and 8-K filings.
The actual report numbers they released on Aug 5 are honestly insane. For the full year 2026, total revenue came in at $20.25 billion, which is a massive 175% jump year over year. Full year GAAP net income reached $11.43 billion, bringing GAAP diluted EPS to $73.76 and non-GAAP EPS to $70.88. For the quarter ending July 3, revenue hit $8.97 billion (up 51% sequentially) with GAAP net income of $6.90 billion or $43.97 per share. Datacenter segment growth is driving most of this, going up 437% year over year, and they also signed 5 new NBM agreements on top of expanding $14 billion in share buybacks.
Now lets do the actual math on enterprise value, cash flows, and multiples from the balance sheet and cash flow statement. Sandisk generated $11.67 billion in operating cash flow and $11.49 billion in free cash flow for the year, and they ended the period with $4.76 billion in cash and zero long-term debt. At a stock price around $1,250 to $1,300 across \~155 million shares, market cap is roughly $195B - $200B. Subtracting the $4.76B cash gives an Enterprise Value of about $195B.
If you divide that $195B EV by the $11.49B in real FCF, you get an EV to FCF multiple of roughly 17x. Trailing P/E sits right around 17x to 18x as well on $73.76 EPS. For a high growth memory and datacenter leader pulling 84.6% gross margins and growing revenue by triple digits, an EV at 17x FCF is ridiculously low. Normally across expansion cycles, category leaders like this trade at an EV closer to 30x FCF.
When you run a standard DCF using conservative 15% cash flow growth over the next few years and re-rate that 17x EV/FCF multiple back to a standard 30x valuation, the math points to a fair value well over $2,500 per share. That means if you invest right now, you stand to make at least 100% profit as the market re-evaluates the real earnings power.
Could the stock theoretically drop a bit more in the short term due to broad tech volatility or macro noise? Sure, that is always possible, but any pullback right now would strictly be temporary given their $15.5 billion total buyback authorization and massive datacenter demand.