Is GLOBALFOUNDRIES (GFS) Undervalued After Winning Up To $21b For Two New Fabs?
GLOBALFOUNDRIES (GFS) stock is in focus after the company was chosen to run two new Malta, New York chip fabs funded by up to US$21b under a U.S.-Japan manufacturing initiative.
Recent announcements around the U.S. Japan fab funding, the TSMC advanced packaging agreement and the new FDX Fusion platform have arrived alongside a 1 day share price return of 4.8%, a 30 day share price gain of 12.4% and a 1 year total shareholder return of 40%. However, the 3 year total shareholder return is down 12%, which points to positive shorter term momentum after a tougher stretch for longer term holders.
Compare GLOBALFOUNDRIES' fresh momentum with other chipmakers backed by strong balance sheets and funding pipelines by scanning our hand picked list of solid balance sheet and fundamentals (25 results) today.
GLOBALFOUNDRIES is suddenly getting credit for long term fab commitments and product bets that have been in motion for years. Is this latest jump mostly sentiment catching up, or does the current valuation already assume a lot?
Most Popular Narrative: 36% Undervalued
GLOBALFOUNDRIES most followed narrative pegs fair value at $76.00, a sizable gap to the last close at $48.94 that puts the recent rally in perspective.
GlobalFoundries diversified manufacturing footprint in the U.S., Europe and China continues to align with customer requirements for regionalized and resilient supply, reinforced by government funding and customer co investment, which can support higher long term revenue and free cash flow.
See why 44 investors see GLOBALFOUNDRIES as 36% undervalued.
Result: Fair Value of $76.00 (UNDERVALUED)
Still, GLOBALFOUNDRIES faces real pressure if smart mobile weakness drags on or if heavy CHIPS-backed spending fails to translate into high margin capacity use.
Find out about the key risks to this GLOBALFOUNDRIES narrative.
Another View: GLOBALFOUNDRIES Through A Cash Flow Lens
The popular narrative frames GLOBALFOUNDRIES as undervalued at a fair value of $76.00, yet the SWS DCF model points the other way. On that cash flow approach, an estimate of $34.91 per share suggests the stock trades rich, which raises a simple question for investors: Are the upbeat earnings forecasts generous or is the model too cautious on long term cash generation?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out GLOBALFOUNDRIES for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 32 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
Sentiment around GLOBALFOUNDRIES is split, which is exactly when independent homework matters most. Move quickly and take a clear stance by checking the 3 key rewards.
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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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