ASML ASML
What does ASML do?
ASML develops, manufactures and services lithography systems used to expose circuit patterns onto silicon wafers. Its offering ranges from systems using extreme ultraviolet radiation (EUV) and deep ultraviolet systems (DUV, immersion and dry systems) to metrology and inspection solutions such as YieldStar and electron beam technology from HMI. This is complemented by computational lithography, i.e. software for optimizing patterns and processes.
Customers are chipmakers in logic and memory. Revenue arises on the one hand from the sale of new systems and on the other from the service business with installed systems, for example through maintenance, upgrades and spare parts. Competitively, ASML holds an exceptional position: as things stand, no other manufacturer offers EUV systems for the most advanced manufacturing nodes. This position rests on high technological complexity, long-standing development and a closely interlinked network of suppliers and customers. In DUV and metrology, by contrast, there are other competitors.
Score profile
Rank vs. Semiconductor Equipment & Materials (24 companies). 10 = top of the group, 5 = middle. Calculated from the metrics below, without AI.
Metrics compared with the industry
On profitability and quality, ASML ranks among the best in the group Semiconductor Equipment & Materials (8.6/10). On growth, the company ranks among the best in the group Semiconductor Equipment & Materials (8.1/10). On valuation (higher = cheaper), the stock ranks below average in the group Semiconductor Equipment & Materials (3.1/10). On financial strength, ASML ranks in the middle in the group Semiconductor Equipment & Materials (4.8/10).
| Metric | Stock | Group median | Ranking |
|---|---|---|---|
| Forward P/E | 23.8x | 20.1x | better than 19 % |
| Trailing P/E | 37.1x | 37.3x | better than 55 % |
| PEG ratio | 0.7x | 1.2x | better than 72 % |
| Price/sales | 14.7x | 5.3x | better than 2 % |
| Revenue growth | 55.2% | 28.6% | better than 81 % |
| Earnings growth | 135.9% | 38.9% | better than 81 % |
| Gross margin | 54.3% | 46.9% | better than 73 % |
| Operating margin | 44.4% | 20.9% | better than 90 % |
| Net margin | 34.1% | 11.3% | better than 94 % |
| Return on equity | 65.6% | 9.7% | better than 90 % |
| Debt/equity | 8.9% | 28.5% | better than 69 % |
| Current ratio | 1.5x | 3.3x | better than 2 % |
| Free cash flow yield | 1.8% | 1.4% | better than 73 % |
| Dividend yield | 0.6% | 0.6% | – |
| Payout ratio | 22.3% | 16.5% | – |
| Beta | 1.33 | 1.70 | – |
Valuation: what is ASML worth?
Two valuation approaches – a discounted cash flow model and a valuation at the industry’s median multiples – give ASML a model range of 766.63 USD to 1,274.90 USD per share.
17 analysts, average rating “Strong buy”, average price target 2,141.55 USD (+42.1%).
The full DCF matrix, the reverse DCF (what growth the price implies) and scenarios are part of the Pro analysis.
What the business depends on
- Chipmakers' investment in new manufacturing capacity and more advanced technology nodes determines demand for lithography systems.
- The technological lead in EUV enables high prices and strong customer attachment to the platform.
- The growing installed base business delivers recurring revenue from service, upgrades and software.
Risks
- The semiconductor industry is cyclical, so investment pauses by customers can noticeably weigh on orders and revenue.
- Export controls and geopolitical tensions can restrict deliveries to certain regions.
- A few large customers and a complex, specialized supply chain create concentration risks and possible production bottlenecks.
What to look for with ASML
Order backlog is particularly informative because, given long lead times and high system prices, it provides insight into chipmakers' demand.