Is It Too Late To Consider ASML Holding (ENXTAM:ASML) After Its Strong Share Price Run?

• With ASML Holding at €1,051.80, this article walks you through what the numbers say about value and considers whether it is still a sensible entry or more of a stretch at current levels.
• The stock has recent returns of 14.2% over 7 days, 9.2% over 30 days, 6.6% year to date, 46.6% over 1 year, 82.4% over 3 years and 160.5% over 5 years. These figures frame the backdrop for any valuation check.
• Recent news has focused on ASML Holding's central role in global semiconductor supply chains and its position as a key supplier of advanced lithography equipment to chipmakers. This attention helps explain why investors are closely watching the share price and reassessing how much they are willing to pay for that exposure.
• Our valuation framework gives ASML Holding a score of 2 out of 6, as it appears undervalued on 2 of 6 checks. Next, we will walk through the main valuation approaches before finishing with a different way of thinking about what a fair price might look like.

ASML Holding scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: ASML Holding Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes future cash flow estimates and discounts them back to today to arrive at an estimate of what the business might be worth right now.

For ASML Holding, the model uses a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections in €. The latest twelve month free cash flow is about €8.6b. Analysts provide explicit forecasts for the next few years, and Simply Wall St then extrapolates these further out. On this basis, projected free cash flow in 2030 is €20.6b, with discounted values supplied for each year through 2035.

When all those discounted cash flows are added up and divided by the number of shares, the DCF model arrives at an estimated intrinsic value of about €841.63 per share. Compared with the current share price of €1,051.80, this suggests the stock is around 25.0% above that DCF estimate, so on this model ASML Holding screens as overvalued at today’s price.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests ASML Holding may be overvalued by 25.0%. Discover 884 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for ASML Holding.

Approach 2: ASML Holding Price vs Earnings (P/E)

For a profitable company like ASML Holding, the P/E ratio is a useful shorthand for how much you are paying for each euro of earnings. It ties the share price directly to the company’s current earnings power, which many investors treat as a core anchor for value.

What counts as a “normal” or “fair” P/E depends on how the market views a company’s growth prospects and risk. Higher expected growth and lower perceived risk usually justify a higher multiple, while slower growth or higher risk point to a lower one.

ASML Holding currently trades on a P/E of 43.0x. That is above the wider Semiconductor industry average of about 39.1x, yet below the peer group average of 50.5x. Simply Wall St’s Fair Ratio for ASML Holding is 47.2x, which is its proprietary estimate of what the P/E “should” be after factoring in elements like earnings growth, industry, profit margins, market cap and specific risk profile.

This Fair Ratio can be more useful than a simple peer or industry comparison because it adjusts for those company specific drivers rather than relying on broad group averages. With the actual P/E of 43.0x below the Fair Ratio of 47.2x, the shares screen as undervalued on this metric.

Result: UNDERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1444 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your ASML Holding Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, which simply means writing down your story for ASML Holding, linking that story to concrete forecasts for revenue, earnings and margins, and then seeing the fair value that follows from those assumptions. All of this happens inside the Narratives tool on Simply Wall St’s Community page, which millions of investors use to compare their own fair value with the current market price, react quickly as Narratives update when new news or earnings arrive, and see, for example, how one ASML Narrative with a fair value of about €500 can sit alongside another at about €1,000, reflecting very different views on long term demand, risks and profitability.

Do you think there's more to the story for ASML Holding? 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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