What Would It Take For Seagate Stock To Do It Again?

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Seagate Technology (STX) sells mass-capacity data storage. The company’s share price has risen 452.7% since October 1, 2021, before dividends. After a rise that large, it is natural to assume the business grew almost as fast. Take a guess: how much of that rise came from Seagate selling more?

How Much Did Seagate’s Sales Grow?

Seagate’s sales grew 20.2% over the past five years, trailing far behind the stock. Sales were $11.5 billion in the twelve months to October 1, 2021, and $13.8 billion in the twelve months to October 2, 2026. Selling more therefore explains only about a tenth of the stock’s rise. That share is not calculated through simple division: sales multiply with the margin and the multiple to set the price, and each component’s share is measured on that compounding basis.

This growth was real and hard won: in the twelve months to September 2023, sales were 35.7% below the year before.

What Else Lifted Seagate Stock?

A share price also rises when a company keeps more of each sale as profit, when investors pay more for each dollar of profit, or when the share count falls. At Seagate, those three factors explain the remaining 89.2% of the rise.

Profit provided the biggest lift. Seagate’s net margin, the share of sales the company keeps as profit, rose from 14.1% to 31.9%. That expansion alone explains nearly half of the stock’s rise. On the October 27 call, management credited the latest quarter’s wider gross margin to better pricing and more Mozaic 4 products in the mix.

Investors also pay more for each dollar of Seagate’s profit than they did five years ago, and that higher price-to-earnings multiple accounts for about two-fifths of the rise. The share count edged up 0.437%, acting as a slight drag. Neither the wider margin nor the higher multiple represents Seagate selling more.

Can Margins And Multiples Keep Rising?

They cannot rise forever, though Seagate’s margin is still widening. The net margin was 31.9% over the latest twelve months, its highest at any quarter end in ten years, and reached 41.6% in the latest quarter alone.

Priced at each quarter’s end, Seagate’s multiple hit a ten-year high of 68.2 in fiscal Q4 2026 and was 47.8 at the end of September. The shares have fallen sharply since, and at the November 5 close the multiple was 24.6.

A margin cannot widen without limit, and investors cannot keep paying more for each dollar of profit forever. Sales can keep growing for as long as Seagate finds buyers.

Multiples can shrink as fast as they grew. Here’s how to invest for a crash and a rally.

What Seagate Would Need To Repeat Its Rise

If the margin, the multiple, and the share count stayed where they are, Seagate’s sales would need to grow 39.9% a year for about five years for the stock to rise as much again. Over the past five years, Seagate’s sales grew 3.7% a year.

Sales are currently growing faster than a repeat would need: revenue in fiscal Q1 2027 was 61.0% higher than a year earlier. On the October 27 call, management said data center revenue, which makes up most of the total, grew 63% from a year earlier. They also noted that most of the company’s supply for data center customers is allocated under long-term supply agreements through calendar 2028.

Measured against the pace a repeat would need, Seagate’s sales growth is the figure to watch when the company reports in January 2027.

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