This is a cyclical-peak chapter for Seagate Technology. The company sells mass-capacity hard drives, with cloud providers’ data centers now representing the vast majority of its shipments.

That intense demand has created a widening gap between supply and demand. Management is responding by using its pricing power while aggressively retiring billions in debt.

Is the market pricing in that story reasonably at 60.0x trailing earnings? One clean way to test it is to compute the revenue growth implied by STX‘s current multiple and see whether the number lines up with how the business actually runs. Before we can get to that number, though, a few assumptions have to be locked in.

The Three Conditions

For STX’s stock price to make sense,…