Revenue ASML: 18.8% CAGR since 2014. Can ASML reach €1,500 per share by 2030?
While ASML's total revenue grew at an 18.8% CAGR since 2014, gross profit increased at a 20.7% CAGR—with the gross profit margin rising by 696 bps from 44.33% in 2014 to 51.29% in 2023.
Operating profit grew at a rate of 24.2% CAGR during this period, resulting in an increase in operating profit margin by 1092 bps from 21.9% in 2014 to 32.8% in 2023. Net profit grew at a rate of 23.2% CAGR since 2014, reaching €7.8 billion in 2023.
Can ASML sustain this growth?
In my valuation analysis, I assume revenue of €52.3 billion in 2030, which is in the middle of ASML's projected range (€44-60 billion). I consider it possible for ASML to grow its gross margin to 58% (ASML's range: 56-60%). I also expect the company to expand its operating and net profit margins to 36% and 32%, respectively (current margins: 51.3% / 32.8% / 28.4%).
If you put these assumptions into Excel, it results in a net profit of €16.7 billion in 2030. With shares outstanding decreasing by 1.5% CAGR due to stock buybacks (SBBs) and a P/E ratio of 32.0—which I believe is feasible if ASML maintains its moat—this implies a stock price of €1,513 by 2030. At the current price of €794, this implies a return of 11.4% IRR, including the dividend payments the company will make in the upcoming years.
Conditions for this valuation is that ASML must indeed increase its revenue and further improve its profitability by ~3.5 pp. If the AI revolution turns out to be larger than we currently anticipate, I expect ASML to reach the upper end of its projected range or even exceed it. In that case, you'd be looking at a stock price well above €2,000 per share for 2030.
For now, I'm assuming a scenario where ASML performs "normally" based on its provided guidance (which would still be a strong performance), while maintaining its strong moat through continuous investments in (new) innovations.
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