ticker: STMPA.PA layer: L4-IDM verdict: red verify_date: 2026-05-28 #

STMicroelectronics (STMPA.PA) — Graham Screen #

Data sources: yfinance, STMPA.PA + STM (NYSE). All EUR unless noted. Verify date: 2026-05-28.

1. Price & Returns #

CRITICAL CONTEXT: The stock is near its 5-year all-time high after an extraordinary 231% rally from the EUR 18 trough. The "auto/industrial trough" thesis hook is stale — the market has already re-rated the recovery.

2. Valuation Multiples #

3. Balance Sheet (Latest: Q1 2026) #

Clean balance sheet. Net cash positive. LT debt well below working capital on all measured years. No balance sheet risk.

4. Five-Year Income & FCF (USD Billions) #

Revenue declined 31.8% from 2023 peak to 2025 trough. Capex was cut sharply (from $4.44B to $2.11B), bringing FCF barely positive in 2025. Q1 2026 shows sequential acceleration (+23% vs Q1 2025) — trough may be in on revenues. Note: no segment breakdown (auto/industrial/MCU) available from yfinance; STM reports Automotive (~45%) and Industrial & Personal Electronics (~55%) split.

5. Dividend History (5 Years) #

Dividend raised in 2024 despite downcycle, paid from strong balance sheet. No cut record. Yield at current price is only 0.52% — not an income story.

6. Insider Transactions (12 months) #

No insider transaction data available through yfinance for STMPA.PA/STM. STM is dual-listed (Paris/NYSE); insiders are mostly French and Italian (major shareholders: CEA-Leti/French state via Bpifrance ~13.5%, Italian Ministry of Economy ~13.5%). These sovereign shareholders are strategic holders, not traded. No recent Form 4 or AMF disclosure data captured; absent data, no weight per shr-002.

7. Analyst Coverage #

Warning signal: Mean analyst target EUR 48.34 is 19% BELOW the current price of EUR 59.80. The stock has rallied through the consensus target. Target high is EUR 69.94 — only 17% upside from here. Consensus was set when the stock was lower.

8. Last 2 Earnings vs Consensus #

Two consecutive large EPS misses. Despite misses, the stock has rallied +109% since Jan 29 (from ~$29 to $60), suggesting the market is pricing a recovery cycle, not trailing fundamentals. Q2 2026 guidance consensus: $0.25 EPS — stock is pricing a sharp H2 inflection. Next earnings July 23, 2026.

Revenue trajectory: $2.52B (Q1'25) → $2.77B (Q2'25) → $3.19B (Q3'25) → $3.33B (Q4'25) → $3.10B (Q1'26). Sequential deceleration in Q1'26 despite YoY growth of +23%.

9. News (Last 90 Days) #

• 2026-05-25: Italian stocks hit first record in 26 years — STM cited as a driver of the chip sector rally.
• 2026-05-22: Multiple pieces framing STM as "Best European Growth Stock" and "AI and analyst rethinks" — narrative shift underway from value trough to AI/growth re-rate.
• 2026-05-22: Analog Devices / ON Semiconductor comparable commentary on industrial segment recovery pacing.
• Government stakes: French state (via Bpifrance) and Italian MEF both hold ~13.5% each. Strategic shareholders; no block-sale risk, but also suppresses M&A premium potential.
• SiC competitive dynamics: Chinese SiC manufacturers (BYD-affiliated, Sanan Optoelectronics) accelerating domestic supply. STM's SiC revenue exposure is significant (~15-20% of auto segment) — price-war risk is real and ongoing.

10. Cycle Position #

The auto semiconductor and industrial MCU cycle inflection is the thesis — but it has substantially played out in the stock price already:

• Revenue trough appears: Q1 2025 ($2.52B) — Q1 2026 (+23% YoY)
• The stock bottomed at EUR 18 in early 2026 (52-week low Jan 2026) and has since rallied 231%
• Consensus 2026 EPS $2.23 USD implies ~12x EPS recovery from 2025's $0.18 — priced in
• The "trough P/E" opportunity has closed: at EUR 18, fwd P/E was ~8x; at EUR 60, it's 30x
• SiC structural headwind is ongoing — not a one-quarter reset

Graham 7 Defensive Filters #

Score: 4/7

The three failures (F5, F6, F7) are no longer purely cyclical — at EUR 60, they reflect valuation, not trough-printing. Six weeks ago at EUR 18, F6 would have passed (fwd P/E ~8x) and F7 might have borderlined. The timing window for Graham entry has closed.

Graham Intrinsic Value (V = EPS × [8.5 + 2g]) #

Current price: EUR 59.80

On trailing earnings: wildly overvalued at any rational growth rate. On normalized or forward EPS: break-even growth is ~9.5–10.6%. That means you need to believe STM can sustain 9.5–10.6% EPS CAGR from a normalized base just to justify EUR 60 — with no margin of safety. At g=10%, IV is EUR 57–73, barely encompassing the current price. A Graham defensive investor requires a meaningful margin of safety below IV, not a coin flip at the boundary.

Per shr-003: trailing vs forward gap here is extreme (trailing implies 209% growth needed, forward implies 10.6%). The market is pricing a full earnings normalization — not a trough. This is the opposite of what Graham investing requires.

shr-020 Red Flag Check #

Active RED flags: 4/7 categories. Per shr-020, thesis may be days/weeks old — here the thesis (auto/industrial trough = Graham value) is factually stale after a 231% rally.

Portfolio Fit #

Context: EUR ~3,000 satellite, holding AGN.AS/RI.PA/AIG/AKE.PA. VWCE already has STM at ~0.1% weight alongside MCHP/ON/NXP/TXN/ADI/MU. A "concentrated overweight" into STM here would be:

• Concentrating into a stock at its all-time high, paying 30x forward P/E
• Competing capital vs RI.PA T2 (EUR 220, 3 shares at ~EUR 70 for a stock -12% from cost with unchanged fundamental floor) and AKE.PA T2 (EUR 52 trigger, thesis intact)
• No Graham margin of safety exists at EUR 60

VERDICT LINE #

RED — DO NOT BUY at current price.

The thesis hook (auto/industrial trough, sub-10x P/E) is structurally correct as a cycle description but is entirely stale as an investment opportunity. The stock rallied +231% from its January 2026 low of EUR 18 to EUR 60, tracking the cycle recovery. At EUR 18, STM would have passed F6 (fwd P/E ~8x), F7 (P/E × P/B ~26 — borderline), and presented a genuine Graham trough entry. At EUR 60, it fails three Graham filters on valuation grounds, trades 19% above mean analyst target, and requires 10%+ normalized EPS CAGR just to break even — with no safety margin. The SiC structural headwind adds unresolved downside. Watchlist at EUR 30–35 (fwd P/E 15–17x, P/B ~1.8x, F7 near 22.5 limit). If the cycle disappoints H2 2026 (China auto softness, SiC pricing), a retest of EUR 30–35 is plausible and would reopen a genuine Graham entry.