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LRCX — Lam Research

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2. Company Fundamentals

2.1 Competitiveness

Metric Value
Operating Margins 35.04%
Profit Margins 30.94%
Return on Equity 66.76%
Return on Assets 22.78%
Free Float 1.25B
Dividend Yield 0.27%
Short Int % Utilisation 2.87%

2.2 Growth

Metric Value
Revenue Growth 23.8%
Free Cash Flow 4.35B
EBITDA 51.15 (Ratio)
Enterprise Value 401.42B
EV/Revenue 18.51
EV/EBITDA 51.15

Revenue growth of 23.8% places the company in a high-growth category.

2.3 Management

Role Metric
Consensus Rating N/A

2.4 Return

Metric Value
Expected Return (Ann.)* 312.91%
Risk / Std Dev (Ann.)* 63.26%
1-Year Price Return* 235.85%

Latest Market Data (as of 2026-08-14, US Eastern time):

Metric Value
Last Price $332.36
52-Week Range $94.11 – $438.50
Observation Count 251 trading days

The return and risk statistics use daily adjusted closes from the retrieved one-year series and annualise daily moments using 252 trading days. The last price is the latest regular-market price reported for the stated date. Source: Yahoo Finance market data.

DuPont Model Analysis

The DuPont model decomposes return on equity (ROE) into three operating and capital-structure drivers:

ROE = Net Margin × Asset Turnover × Equity Multiplier

The comparison uses the latest two comparable annual periods available for the issuer, with reported statement amounts shown in US$. Revenue and net income are income-statement flows; total assets and shareholders’ equity are year-end balance-sheet figures. This is a simplified year-end-balance DuPont comparison rather than an average-balance ROE calculation.

DuPont component Calculation FY2026 FY2025
Revenue Reported revenue $23.23B $18.44B
Net income Reported net income $7.27B $5.36B
Total assets Year-end reported balance $23.53B $21.35B
Shareholders’ equity Year-end reported balance $12.47B $9.86B
Net margin Net income ÷ revenue 31.27% 29.06%
Asset turnover Revenue ÷ total assets 0.9874x 0.8637x
Equity multiplier Total assets ÷ shareholders’ equity 1.8868x 2.1645x
ROE Net margin × asset turnover × equity multiplier 58.26% 54.33%

Source: Yahoo Finance annual statements. Values are based on the two latest comparable annual periods returned by the source; fiscal period labels use the statement period-end year.

2.5 FCFF DCF Valuation

Valuation basis: This research model follows a five-year, unlevered FCFF DCF. It starts from reported annual operating inputs, forecasts revenue and operating cash conversion under an explicit mechanical policy, discounts FCFF at WACC, applies a Gordon-growth terminal value, and bridges enterprise value to an indicative common-equity value per share. It is an analytical estimate rather than a recommendation or personalised target price.

Step 1 — Forecast Operating Profit and NOPAT

Reported operating input Value
Revenue $23.23B
Prior annual revenue $18.44B
EBIT $8.42B
Tax rate 12.10%
NOPAT = EBIT × (1 − tax rate) $7.40B
Forecast start-growth basis 15.00%
Forecast policy latest reported annual revenue growth, bounded to -10.00% / 15.00%

Step 2 — Calculate FCFF

Current FCFF building block Value
NOPAT $7.40B
Add: depreciation & amortisation $441.53M
Less: capital expenditure -$966.40M
Less/(add): working-capital cash-flow movement -$1.91B
Current unlevered FCFF $4.96B

Explicit FCFF forecast

Forecast year Revenue growth NOPAT D&A Capex Change in NWC FCFF Present value
1 15.00% $8.51B $507.76M -$1.11B -$2.20B $5.71B $5.32B
2 11.88% $9.52B $568.06M -$1.07B -$2.46B $6.55B $5.32B
3 8.75% $10.35B $617.77M -$984.95M -$2.68B $7.31B $5.17B
4 5.62% $10.94B $652.51M -$846.43M -$2.83B $7.91B $4.87B
5 2.50% $11.21B $668.83M -$668.83M -$2.90B $8.31B $4.46B

Step 3 — Determine the Discount Rate (WACC)

WACC input Value
Risk-free rate 4.71%
Equity risk premium assumption 5.50%
Beta 1.86
Cost of equity 14.97%
Pre-tax cost of debt 3.82%
WACC 14.86%
WACC validation within standard range

Step 4 — Estimate Terminal Value

Terminal-value input Value
Perpetuity growth rate 2.50%
Terminal value $68.91B
Implied terminal EV / EBITDA 5.13x
Terminal value as % of enterprise value 57.82%

Step 5 — Discount Cash Flows to Enterprise Value

Enterprise-value component Value
Present value of explicit FCFF $25.14B
Present value of terminal value $34.46B
Indicated enterprise value $59.61B
Discounting convention mid-year for explicit FCFF; terminal value discounted at year-end five

Step 6 — Convert Enterprise Value to Equity Value

Equity bridge Value
Indicated enterprise value $59.61B
Less: gross interest-bearing debt $3.73B
Add: cash and equivalents $5.58B
Add: affiliate investments $0.00
Less: minority interests $0.00
Indicated common equity value $61.45B

Step 7 — Calculate Indicative Value Per Share

Per-share output Value
Shares used 1,261,102,000.00
Share-count basis reported diluted weighted-average shares
Current market price $323.55
DCF indicative value per share $48.73
Indicative value vs. market price -84.94%

Model Integrity Checks

Check Result
Perpetuity growth is below the risk-free rate pass
Perpetuity growth is below WACC pass
WACC is within the configured operating-company range pass
Terminal-year FCFF is positive pass
Terminal capex converges to D&A pass
Terminal-value concentration within review band
Implied price differs from spot by more than 30% review required

2.6 Investor-Style Research Screen

Educational screen Result
Buffett-inspired cash-quality checks 3/4 evidenced checks
Lynch-inspired balance-and-growth checks 4/4 evidenced checks

Data lineage: Yahoo Finance public market and reported-statement data; retrieval timestamp: 2026-08-18 17:40:43.198000 UTC; latest reported fiscal period: 2026-06-30 00:00:00. Default assumptions: five-year forecast, mid-year discounting for explicit FCFF, a maximum 2.50% perpetuity-growth rate below both WACC and the risk-free rate, historical operating-ratio persistence, and capex convergence to D&A by year five. No sell-side consensus or management guidance is substituted for reported inputs. This is research and analysis only, not personalized financial advice.

2.7 Quantitative Factor Diagnostics

Model basis: Daily issuer USD excess returns are regressed in-sample using ordinary least squares on matching regional Fama–French factors. FF3 estimates market, size, and value loadings; FF5 adds profitability and investment. Coefficients are descriptive historical exposures, not predictions.

Estimation input Value
Regional factor set US
Factor-return currency USD
Issuer-return basis USD adjusted total return
Estimation window 2025-08-19 to 2026-06-30
Aligned daily observations 217
Minimum observation requirement 120
Currency conversion for HK listings not required

Fama–French Three-Factor and Five-Factor Results

Diagnostic FF3 FF5
Annualised alpha 274.37% 196.98%
Adjusted R² 0.47 0.50
Annualised residual volatility 42.25% 40.69%
Factor loading (t-statistic) FF3 FF5
Market excess return (Mkt-RF) 3.18 (12.79) 2.73 (9.89)
Size (SMB) -0.45 (-1.34) -0.78 (-2.22)
Value (HML) 0.40 (1.37) 0.49 (1.41)
Profitability (RMW) NM -1.18 (-4.05)
Investment (CMA) NM 0.41 (0.81)

Definitions: Mkt-RF is the market return less the risk-free rate; SMB is small minus big; HML is high minus low book-to-market; RMW is robust minus weak profitability; CMA is conservative minus aggressive investment. Factor returns are sourced from the Kenneth R. French Data Library; issuer adjusted-return history is sourced from Yahoo Finance. For Hong Kong listings, adjusted HKD prices are converted into USD with daily USD/HKD closes before return calculation to match the USD regional factor basis. This is an in-sample historical regression; coefficients and t-statistics do not establish causation or predict future returns. This is research and analysis only, not personalized financial advice.

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