Apple Inc.’s Stock Valuation Reveals Substantial Overvaluation

NEW YORK, NY — A recent discounted cash flow (DCF) analysis of Apple Inc. (AAPL) suggests that the tech giant’s stock may be significantly overvalued. The analysis conducted this week, typically reserved for stocks currently in screening, highlights a substantial discrepancy between Apple’s estimated intrinsic value and its current market price.

Apple Inc., a multinational technology company known for its innovative consumer electronics, software, and online services, has seen its share price rise by 29.93% over the past twelve months, as reported by Google Finance. The company’s popular products include the iPhone, iPad, Mac computers, Apple Watch, and Apple TV, along with software platforms like iOS and services such as Apple Music, iCloud, and Apple Pay.

According to the DCF analysis, the forecasted free cash flows (FCFs) for Apple are as follows: by 2025, the estimated FCF is $116.8 billion, increasing to $211 billion by 2029. The total present value of these cash flows sums up to $597.1 billion.

The DCF analysis also involves a terminal value calculation using the perpetuity growth model. This calculation estimates a terminal value of $3,622.8 billion, which, when discounted back, yields a present value of $2,354.6 billion.

Combining the present value of the forecasted cash flows and the terminal value results in an enterprise value of $2,951.7 billion. After accounting for net debt of $47.1 billion, the equity value is calculated at approximately $2,904.6 billion.

With shares outstanding at 15.02 billion, the per-share DCF value is estimated to be $193.38. In contrast, the current market price hovers around $237.30, leading to a margin of safety of -18.47% based on this valuation.

This analysis posits that with an intrinsic value of $193.38 per share, Apple’s stock is overvalued at its present trading price. Investors may wish to consider this information when making decisions regarding their portfolios.

For ongoing insights, consider subscribing to our newsletter, where we provide updates on the latest financial news and analysis.