Intrinsic value of Apple - AAPL

Previous Close

$172.43

  Intrinsic Value

$271.08

stock screener

  Rating & Target

str. buy

+57%

Previous close

$172.43

 
Intrinsic value

$271.08

 
Up/down potential

+57%

 
Rating

str. buy

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of AAPL stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of Apple (AAPL) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.30
  12.20
  11.48
  10.83
  10.25
  9.72
  9.25
  8.83
  8.44
  8.10
  7.79
  7.51
  7.26
  7.03
  6.83
  6.65
  6.48
  6.33
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.57
  5.52
  5.47
  5.42
  5.38
  5.34
Revenue, $m
  229,234
  257,201
  286,727
  317,785
  350,355
  384,423
  419,988
  457,058
  495,650
  535,795
  577,530
  620,905
  665,980
  712,821
  761,508
  812,126
  864,772
  919,548
  976,567
  1,035,949
  1,097,822
  1,162,323
  1,229,596
  1,299,794
  1,373,078
  1,449,618
  1,529,592
  1,613,187
  1,700,601
  1,792,039
  1,887,718
Variable operating expenses, $m
 
  185,629
  206,874
  229,220
  252,654
  277,166
  302,755
  329,427
  357,195
  386,079
  416,108
  446,745
  479,176
  512,879
  547,910
  584,330
  622,209
  661,620
  702,646
  745,372
  789,890
  836,298
  884,702
  935,210
  987,938
  1,043,009
  1,100,551
  1,160,698
  1,223,592
  1,289,383
  1,358,224
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  167,890
  185,629
  206,874
  229,220
  252,654
  277,166
  302,755
  329,427
  357,195
  386,079
  416,108
  446,745
  479,176
  512,879
  547,910
  584,330
  622,209
  661,620
  702,646
  745,372
  789,890
  836,298
  884,702
  935,210
  987,938
  1,043,009
  1,100,551
  1,160,698
  1,223,592
  1,289,383
  1,358,224
Operating income, $m
  61,344
  71,571
  79,854
  88,565
  97,701
  107,257
  117,232
  127,630
  138,455
  149,716
  161,422
  174,160
  186,803
  199,942
  213,598
  227,797
  242,563
  257,928
  273,921
  290,577
  307,932
  326,025
  344,894
  364,584
  385,140
  406,609
  429,041
  452,489
  477,008
  502,656
  529,493
EBITDA, $m
  71,501
  79,602
  88,740
  98,353
  108,433
  118,977
  129,984
  141,457
  153,401
  165,825
  178,742
  192,166
  206,117
  220,614
  235,682
  251,348
  267,642
  284,595
  302,242
  320,620
  339,769
  359,732
  380,553
  402,278
  424,959
  448,648
  473,399
  499,272
  526,326
  554,625
  584,237
Interest expense (income), $m
  2,092
  3,402
  4,358
  5,363
  6,420
  7,528
  8,688
  9,898
  11,160
  12,473
  13,840
  15,260
  16,736
  18,270
  19,865
  21,522
  23,244
  25,036
  26,900
  28,841
  30,862
  32,968
  35,163
  37,453
  39,842
  42,336
  44,941
  47,663
  50,508
  53,483
  56,595
Earnings before tax, $m
  64,089
  68,169
  75,496
  83,202
  91,281
  99,728
  108,545
  117,732
  127,295
  137,242
  147,582
  158,900
  170,067
  181,672
  193,734
  206,275
  219,319
  232,892
  247,021
  261,736
  277,071
  293,057
  309,731
  327,132
  345,299
  364,273
  384,100
  404,827
  426,500
  449,173
  472,899
Tax expense, $m
  15,738
  18,406
  20,384
  22,465
  24,646
  26,927
  29,307
  31,788
  34,370
  37,055
  39,847
  42,903
  45,918
  49,051
  52,308
  55,694
  59,216
  62,881
  66,696
  70,669
  74,809
  79,125
  83,627
  88,326
  93,231
  98,354
  103,707
  109,303
  115,155
  121,277
  127,683
Net income, $m
  48,351
  49,764
  55,112
  60,738
  66,635
  72,802
  79,238
  85,944
  92,926
  100,187
  107,735
  115,997
  124,149
  132,620
  141,426
  150,581
  160,103
  170,011
  180,325
  191,068
  202,262
  213,932
  226,104
  238,806
  252,068
  265,919
  280,393
  295,523
  311,345
  327,896
  345,216

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  74,181
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  375,319
  337,977
  376,777
  417,589
  460,387
  505,155
  551,889
  600,601
  651,314
  704,067
  758,910
  815,907
  875,138
  936,690
  1,000,668
  1,067,183
  1,136,363
  1,208,342
  1,283,268
  1,361,300
  1,442,605
  1,527,363
  1,615,764
  1,708,008
  1,804,308
  1,904,886
  2,009,976
  2,119,825
  2,234,692
  2,354,847
  2,480,575
Adjusted assets (=assets-cash), $m
  301,138
  337,977
  376,777
  417,589
  460,387
  505,155
  551,889
  600,601
  651,314
  704,067
  758,910
  815,907
  875,138
  936,690
  1,000,668
  1,067,183
  1,136,363
  1,208,342
  1,283,268
  1,361,300
  1,442,605
  1,527,363
  1,615,764
  1,708,008
  1,804,308
  1,904,886
  2,009,976
  2,119,825
  2,234,692
  2,354,847
  2,480,575
Revenue / Adjusted assets
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
  0.761
Average production assets, $m
  33,149
  37,294
  41,575
  46,079
  50,801
  55,741
  60,898
  66,273
  71,869
  77,690
  83,742
  90,031
  96,567
  103,359
  110,419
  117,758
  125,392
  133,334
  141,602
  150,213
  159,184
  168,537
  178,291
  188,470
  199,096
  210,195
  221,791
  233,912
  246,587
  259,846
  273,719
Working capital, $m
  27,831
  -31,378
  -34,981
  -38,770
  -42,743
  -46,900
  -51,239
  -55,761
  -60,469
  -65,367
  -70,459
  -75,750
  -81,250
  -86,964
  -92,904
  -99,079
  -105,502
  -112,185
  -119,141
  -126,386
  -133,934
  -141,803
  -150,011
  -158,575
  -167,516
  -176,853
  -186,610
  -196,809
  -207,473
  -218,629
  -230,302
Total debt, $m
  115,680
  124,511
  153,223
  183,424
  215,095
  248,223
  282,806
  318,853
  356,381
  395,417
  436,001
  478,179
  522,010
  567,559
  614,902
  664,124
  715,316
  768,581
  824,026
  881,770
  941,935
  1,004,656
  1,070,073
  1,138,334
  1,209,596
  1,284,024
  1,361,790
  1,443,079
  1,528,080
  1,616,995
  1,710,034
Total liabilities, $m
  241,272
  250,103
  278,815
  309,016
  340,687
  373,815
  408,398
  444,445
  481,973
  521,009
  561,593
  603,771
  647,602
  693,151
  740,494
  789,716
  840,908
  894,173
  949,618
  1,007,362
  1,067,527
  1,130,248
  1,195,665
  1,263,926
  1,335,188
  1,409,616
  1,487,382
  1,568,671
  1,653,672
  1,742,587
  1,835,626
Total equity, $m
  134,047
  87,874
  97,962
  108,573
  119,701
  131,340
  143,491
  156,156
  169,342
  183,057
  197,316
  212,136
  227,536
  243,539
  260,174
  277,468
  295,454
  314,169
  333,650
  353,938
  375,077
  397,114
  420,099
  444,082
  469,120
  495,270
  522,594
  551,155
  581,020
  612,260
  644,950
Total liabilities and equity, $m
  375,319
  337,977
  376,777
  417,589
  460,388
  505,155
  551,889
  600,601
  651,315
  704,066
  758,909
  815,907
  875,138
  936,690
  1,000,668
  1,067,184
  1,136,362
  1,208,342
  1,283,268
  1,361,300
  1,442,604
  1,527,362
  1,615,764
  1,708,008
  1,804,308
  1,904,886
  2,009,976
  2,119,826
  2,234,692
  2,354,847
  2,480,576
Debt-to-equity ratio
  0.863
  1.420
  1.560
  1.690
  1.800
  1.890
  1.970
  2.040
  2.100
  2.160
  2.210
  2.250
  2.290
  2.330
  2.360
  2.390
  2.420
  2.450
  2.470
  2.490
  2.510
  2.530
  2.550
  2.560
  2.580
  2.590
  2.610
  2.620
  2.630
  2.640
  2.650
Adjusted equity ratio
  0.239
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260
  0.260

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  48,351
  49,764
  55,112
  60,738
  66,635
  72,802
  79,238
  85,944
  92,926
  100,187
  107,735
  115,997
  124,149
  132,620
  141,426
  150,581
  160,103
  170,011
  180,325
  191,068
  202,262
  213,932
  226,104
  238,806
  252,068
  265,919
  280,393
  295,523
  311,345
  327,896
  345,216
Depreciation, amort., depletion, $m
  10,157
  8,031
  8,887
  9,787
  10,732
  11,720
  12,751
  13,826
  14,946
  16,110
  17,320
  18,006
  19,313
  20,672
  22,084
  23,552
  25,078
  26,667
  28,320
  30,043
  31,837
  33,707
  35,658
  37,694
  39,819
  42,039
  44,358
  46,782
  49,317
  51,969
  54,744
Funds from operations, $m
  58,048
  57,794
  63,999
  70,525
  77,367
  84,522
  91,989
  99,771
  107,871
  116,297
  125,055
  134,003
  143,462
  153,292
  163,509
  174,132
  185,181
  196,678
  208,646
  221,110
  234,098
  247,639
  261,762
  276,500
  291,887
  307,958
  324,752
  342,306
  360,663
  379,866
  399,960
Change in working capital, $m
  -5,550
  -3,412
  -3,602
  -3,789
  -3,973
  -4,156
  -4,339
  -4,523
  -4,708
  -4,898
  -5,092
  -5,292
  -5,499
  -5,715
  -5,940
  -6,175
  -6,423
  -6,683
  -6,956
  -7,245
  -7,549
  -7,869
  -8,207
  -8,564
  -8,941
  -9,338
  -9,757
  -10,199
  -10,664
  -11,155
  -11,673
Cash from operations, $m
  63,598
  61,206
  67,601
  74,314
  81,340
  88,678
  96,328
  104,293
  112,579
  121,194
  130,147
  139,295
  148,961
  159,007
  169,449
  180,308
  191,604
  203,360
  215,602
  228,355
  241,647
  255,508
  269,969
  285,064
  300,828
  317,296
  334,508
  352,504
  371,327
  391,021
  411,633
Maintenance CAPEX, $m
  0
  -6,630
  -7,459
  -8,315
  -9,216
  -10,160
  -11,148
  -12,180
  -13,255
  -14,374
  -15,538
  -16,748
  -18,006
  -19,313
  -20,672
  -22,084
  -23,552
  -25,078
  -26,667
  -28,320
  -30,043
  -31,837
  -33,707
  -35,658
  -37,694
  -39,819
  -42,039
  -44,358
  -46,782
  -49,317
  -51,969
New CAPEX, $m
  -12,795
  -4,146
  -4,281
  -4,503
  -4,723
  -4,940
  -5,157
  -5,375
  -5,596
  -5,821
  -6,052
  -6,289
  -6,536
  -6,792
  -7,060
  -7,340
  -7,634
  -7,943
  -8,268
  -8,610
  -8,972
  -9,353
  -9,755
  -10,179
  -10,626
  -11,098
  -11,596
  -12,121
  -12,675
  -13,259
  -13,873
Cash from investing activities, $m
  -46,446
  -10,776
  -11,740
  -12,818
  -13,939
  -15,100
  -16,305
  -17,555
  -18,851
  -20,195
  -21,590
  -23,037
  -24,542
  -26,105
  -27,732
  -29,424
  -31,186
  -33,021
  -34,935
  -36,930
  -39,015
  -41,190
  -43,462
  -45,837
  -48,320
  -50,917
  -53,635
  -56,479
  -59,457
  -62,576
  -65,842
Free cash flow, $m
  17,152
  50,431
  55,861
  61,496
  67,402
  73,578
  80,023
  86,738
  93,729
  100,999
  108,557
  116,257
  124,419
  132,901
  141,718
  150,884
  160,419
  170,340
  180,667
  191,424
  202,633
  214,319
  226,508
  239,227
  252,508
  266,379
  280,873
  296,025
  311,870
  328,445
  345,790
Issuance/(repayment) of debt, $m
  29,014
  27,304
  28,712
  30,201
  31,670
  33,128
  34,584
  36,047
  37,528
  39,037
  40,584
  42,178
  43,830
  45,549
  47,343
  49,222
  51,193
  53,265
  55,445
  57,743
  60,166
  62,721
  65,417
  68,261
  71,262
  74,428
  77,767
  81,288
  85,001
  88,915
  93,039
Issuance/(repurchase) of shares, $m
  -32,345
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -4,578
  27,304
  28,712
  30,201
  31,670
  33,128
  34,584
  36,047
  37,528
  39,037
  40,584
  42,178
  43,830
  45,549
  47,343
  49,222
  51,193
  53,265
  55,445
  57,743
  60,166
  62,721
  65,417
  68,261
  71,262
  74,428
  77,767
  81,288
  85,001
  88,915
  93,039
Total cash flow (excl. dividends), $m
  12,574
  77,735
  84,573
  91,697
  99,073
  106,706
  114,606
  122,785
  131,257
  140,036
  149,141
  158,436
  168,250
  178,450
  189,061
  200,106
  211,611
  223,604
  236,113
  249,167
  262,799
  277,040
  291,924
  307,488
  323,769
  340,806
  358,640
  377,313
  396,871
  417,360
  438,829
Retained Cash Flow (-), $m
  -5,798
  -9,535
  -10,088
  -10,611
  -11,127
  -11,640
  -12,151
  -12,665
  -13,185
  -13,716
  -14,259
  -14,819
  -15,400
  -16,004
  -16,634
  -17,294
  -17,987
  -18,715
  -19,481
  -20,288
  -21,139
  -22,037
  -22,984
  -23,984
  -25,038
  -26,150
  -27,324
  -28,561
  -29,865
  -31,240
  -32,689
Prev. year cash balance distribution, $m
 
  55,708
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  123,908
  74,485
  81,086
  87,945
  95,066
  102,455
  110,120
  118,071
  126,320
  134,882
  143,616
  152,850
  162,447
  172,427
  182,812
  193,625
  204,890
  216,632
  228,879
  241,659
  255,002
  268,940
  283,505
  298,731
  314,656
  331,317
  348,753
  367,006
  386,120
  406,140
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  118,799
  68,188
  70,566
  72,414
  73,688
  74,356
  74,396
  73,797
  72,564
  70,713
  68,201
  65,226
  61,765
  57,887
  53,671
  49,204
  44,581
  39,895
  35,241
  30,708
  26,376
  22,315
  18,581
  15,215
  12,241
  9,666
  7,485
  5,678
  4,215
  3,058
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Apple Inc. (Apple) designs, manufactures and markets mobile communication and media devices, personal computers, and portable digital music players, and a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications. The Company's products and services include iPhone, iPad, Mac, iPod, Apple TV, a portfolio of consumer and professional software applications, the iOS and OS X operating systems, iCloud, and a variety of accessory, service and support offerings. The Company also delivers digital content and applications through the iTunes Store, App StoreSM, iBookstoreSM, and Mac App Store. The Company distributes its products worldwide through its retail stores, online stores, and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers, and value-added resellers. In February 2012, the Company acquired app-search engine Chomp.

FINANCIAL RATIOS  of  Apple (AAPL)

Valuation Ratios
P/E Ratio 18.3
Price to Sales 3.9
Price to Book 6.6
Price to Tangible Book
Price to Cash Flow 13.9
Price to Free Cash Flow 17.4
Growth Rates
Sales Growth Rate 6.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -5.6%
Cap. Spend. - 3 Yr. Gr. Rate 5.5%
Financial Strength
Quick Ratio 4
Current Ratio 0.1
LT Debt to Equity 72.5%
Total Debt to Equity 86.3%
Interest Coverage 32
Management Effectiveness
Return On Assets 14.3%
Ret/ On Assets - 3 Yr. Avg. 16.7%
Return On Total Capital 20.8%
Ret/ On T. Cap. - 3 Yr. Avg. 25.3%
Return On Equity 36.9%
Return On Equity - 3 Yr. Avg. 40%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 38.5%
Gross Margin - 3 Yr. Avg. 39.2%
EBITDA Margin 33.3%
EBITDA Margin - 3 Yr. Avg. 34.4%
Operating Margin 26.8%
Oper. Margin - 3 Yr. Avg. 28.4%
Pre-Tax Margin 28%
Pre-Tax Margin - 3 Yr. Avg. 29.1%
Net Profit Margin 21.1%
Net Profit Margin - 3 Yr. Avg. 21.7%
Effective Tax Rate 24.6%
Eff/ Tax Rate - 3 Yr. Avg. 25.5%
Payout Ratio 26.4%

AAPL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AAPL stock intrinsic value calculation we used $229234 million for the last fiscal year's total revenue generated by Apple. The default revenue input number comes from 2017 income statement of Apple. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our AAPL stock valuation model: a) initial revenue growth rate of 12.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for AAPL is calculated based on our internal credit rating of Apple, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Apple.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of AAPL stock the variable cost ratio is equal to 72.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for AAPL stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Apple.

Corporate tax rate of 27% is the nominal tax rate for Apple. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the AAPL stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for AAPL are equal to 14.5%.

Life of production assets of 3.8 years is the average useful life of capital assets used in Apple operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for AAPL is equal to -12.2%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $134047 million for Apple - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 5190.45 million for Apple is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Apple at the current share price and the inputted number of shares is $895.0 billion.

Management's discussion and analysis

The Company designs, manufactures and markets mobile communication and media devices, personal computers and portable digital music players, and sells a variety of related software, services, accessories, networking solutions and third-party digital content and applications. The Company’s products and services include iPhone®, iPad®, Mac®, iPod®, Apple Watch®, Apple TV®, a portfolio of consumer and professional software applications, iOS, macOS™, watchOS® and tvOS™ operating systems, iCloud®, Apple Pay® and a variety of accessory, service and support offerings. The Company sells and delivers digital content and applications through the iTunes Store®, App Store®, Mac App Store, TV App Store, iBooks Store™ and Apple Music® (collectively “Internet Services”). The Company sells its products worldwide through its retail stores, online stores and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers and value-added resellers. In addition, the Company sells a variety of third-party Apple compatible products, including application software and various accessories through its retail and online stores. The Company sells to consumers, small and mid-sized businesses and education, enterprise and government customers.

Fiscal 2016 Highlights

Net sales declined 8% or $18.1 billion during 2016 compared to 2015, primarily driven by a year-over-year decrease in iPhone net sales and the effect of weakness in most foreign currencies relative to the U.S. dollar, partially offset by an increase in Services. In April 2016, the Company announced a significant increase to its capital return program by raising the expected total size of the program from $200 billion to $250 billion through March 2018. This included increasing its share repurchase authorization from $140 billion to $175 billion and raising its quarterly dividend from $0.52 to $0.57 per share beginning in May 2016. During 2016, the Company spent $29.0 billion to repurchase shares of its common stock and paid dividends and dividend equivalents of $12.2 billion. Additionally, the Company issued $23.9 billion of U.S. dollar-denominated term debt and A$1.4 billion of Australian dollar-denominated term debt during 2016.

Fiscal 2015 Highlights

Net sales rose 28% or $50.9 billion during 2015 compared to 2014, driven by a year-over-year increase in iPhone net sales. iPhone net sales and unit sales in 2015 increased in all of the Company’s reportable operating segments. The Company also experienced year-over-year net sales increases in Mac, Services and Other Products. Apple Watch, which launched during the third quarter of 2015, accounted for more than 100% of the year-over-year growth in net sales of Other Products. Net sales growth during 2015 was partially offset by the effect of weakness in most foreign currencies relative to the U.S. dollar and lower iPad net sales. Total net sales increased in each of the Company’s reportable operating segments, with particularly strong growth in Greater China where year-over-year net sales increased 84%.
In April 2015, the Company announced a significant increase to its capital return program by raising the expected total size of the program to $200 billion through March 2017. This included increasing its share repurchase authorization to $140 billion and raising its quarterly dividend to $0.52 per share beginning in May 2015. During 2015, the Company spent $36.0 billion to repurchase shares of its common stock and paid dividends and dividend equivalents of $11.6 billion. Additionally, the Company issued $14.5 billion of U.S. dollar-denominated, €4.8 billion of euro-denominated, SFr1.3 billion of Swiss franc-denominated, £1.3 billion of British pound-denominated, A$2.3 billion of Australian dollar-denominated and ¥250.0 billion of Japanese yen-denominated term debt during 2015.

[Source: Form 10-K dated 2016-10-26]

RELATED COMPANIES Price Int.Val. Rating
MSFT Microsoft 92.00 55.03  sell
VZ Verizon Commun 50.15 42.47  hold
HPQ HP 21.40 32.13  str.buy
IBM International 156.18 173.04  hold
SNE Sony ADR 49.55 259.79  str.buy
GOOGL Alphabet Cl A 1,095.50 1,028.37  hold
WDC Western Digita 84.91 207.52  str.buy

COMPANY NEWS

▶ 3 Reasons Why Apple's Shares Will Outperform   [Feb-20-18 11:57AM  Investopedia]
▶ Apple, Nvidia Lead Tech Stocks Higher; Walmart Weighs On Dow   [11:00AM  Investor's Business Daily]
▶ Is Facebook's Stock Now The Next Apple?   [09:41AM  Investor's Business Daily]
▶ [$$] Why the iPhone Is Losing Out to Chinese Devices in Asia   [Feb-19-18 11:51PM  The Wall Street Journal]
▶ [$$] The Big Shift Driving Tech Profits   [11:51PM  The Wall Street Journal]
▶ Don't Lose Faith in Himax Technologies   [04:13PM  GuruFocus.com]
▶ The iPhone X May Be Here to Stay   [05:08PM  Motley Fool]
▶ Warren Buffett takes a big bite of Apple, dumps IBM (Video)   [01:55PM  American City Business Journals]
▶ [$$] Review: Apples HomePod has its limits   [05:00AM  Financial Times]
▶ Apple Inc. Has Another China Problem   [06:33PM  Motley Fool]
▶ Report: People cant stop walking into glass at Apples new headquarters   [05:39PM  American City Business Journals]
▶ Universal Display Slips As Client Samsung Deals With Surplus   [04:17PM  Investor's Business Daily]
▶ AI In Business: This Is What The Future Holds   [02:06PM  Investor's Business Daily]
▶ Stock Market Follows Apple's Lead   [10:02AM  The Wall Street Journal]
▶ Apple Is Leading a Resurgent Stock Market   [06:10AM  TheStreet.com]
▶ Shopify Is Augmenting Its Reality   [Feb-15-18 08:06PM  Motley Fool]
▶ 3 Reasons Fitbit Inc. Bought Twine Health   [06:51PM  Motley Fool]
▶ Top Stocks Warren Buffett Is Buying Now   [05:11PM  Motley Fool]
▶ Apple Stock Rises As Berkshire Hathaway Increases Its Stake   [04:33PM  Investor's Business Daily]
▶ Stock Market Surges Again; Dow Led By Cisco, Apple, Boeing   [04:17PM  Investor's Business Daily]
Financial statements of AAPL
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.