Sandisk: A Low P/E Depends on NAND Prices
Analysis date
Published
MW GOBLIN · AI company research
As of 2026-11-12, data center growth and cash generation are positive. However, the forward P/E of 4.19 x assumes that high NAND prices persist, so a conclusion that the stock is undervalued is withheld until earnings under normalized cyclical conditions can be assessed.
Toss Securities
Quote November 12, 2026 at 12:49 KST
Retrieved November 12, 2026 at 12:49 KST
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Dependence on pricing remains high despite data center growth
FY2027 Q1 data center revenue was 4802000000 USD, up 61% from the previous quarter. However, total capacity sold increased only about 10% year over year, making pricing the key driver of revenue growth of 378% and a gross margin of 85.0%. Micron is also expanding shipments of SSDs for AI, so industry growth alone does not guarantee market share gains. The year-over-year decline of 39% in consumer revenue shows the pressure that high prices place on demand. [1][2][5]
Long-term contracts improve revenue visibility
Long-term supply agreements reduce uncertainty around volume and price negotiations. As of 2026-10-2, remaining performance obligations were 88900000000 USD, but the company expects to recognize approximately 20% of that amount as revenue over the next 12 months. Management stated that half of FY2027 capacity sold was covered by contracts. However, the mix of fixed and variable pricing and the lack of disclosure of individual terms mean that the outstanding contract value cannot be treated as current revenue or sustainable earnings. [1][3]
Cash after investment and advance payments underpins shareholder returns
Subtracting capital expenditures of 54000000, net lending to joint ventures of 148000000, and the effect of customer advance payments and deposits of 465000000 from FY2027 Q1 operating cash flow of 6363000000 USD yields the company's adjusted free cash flow of 5696000000 USD. This covered share repurchases of 5000000000 USD, but the cash flow margin declined from 56.2% in the previous quarter to 51.6%. As of October 2 day, cash was 5136000000 USD and there were no outstanding borrowings; lease liabilities of 201000000 USD are separate. [1][2]
4.19 x is the multiple if high margins persist
Dividing the retrieved share price of 952.96 USD by the FY2027 adjusted EPS consensus of 227.48 USD, compiled on November 11 day, gives a P/E of 4.19 x. The market expects annual revenue of 49570000000 USD and a gross margin of 84.85%. Quarterly diluted weighted-average shares were 154000000 shares, and both the share price and EPS are on a pre-split basis. No price target is provided because normalized margins and differences in the bases used for peer valuation multiples are unclear. [1][4]
What could change the thesis
- Conditions for a more favorable assessment: FY2027 Q2 guidance for revenue of 12200000000 ~ 12600000000 USD and adjusted EPS of 55~57 USD is achieved, and additional long-term contracts are secured.
- Conditions for a less favorable assessment: NAND price weakness and rising accounts receivable persist, causing both gross margin and the adjusted cash flow margin to decline.
Sources and Evidence
- Sandisk FY2027 Q1 10-Q ↗2026-10-30 · Financial statements and notes 4·8·10·12·16
- Sandisk FY2027 Q1 earnings release ↗2026-10-29 · Pages 2~3 and 10: results, guidance, and cash flow
- Sandisk earnings call, provided by Quartr ↗2026-10-29 · Management presentation and analyst Q&A
- S&P Global consensus, Stock Analysis ↗2026-11-11 · FY2027 forecasts, compilation date, and data notes
- Micron FY2026 full-year and Q4 results ↗2026-09-30 · Pages 1~3: results, guidance, and products
This AI-generated report is for information. Check the analysis date and primary sources. Terms