Apple Inc.AAPLNASDAQ

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Hold

Fair Value: $273.98 per share(market-calibrated)

+3.5%

Upside to Fair Value

Current

$264.72

Pure Model

$270.74

Fair Value

$273.98

Bull Case

$366.22

Bear Case

$194.70

Market Reality Check

Model Terminal Growth

3.75%

Market-Implied Growth

5.32%

Calibrated Growth

3.98%

Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $270.74.

What's Driving This Ratingfor AAPL

✓

CapEx already efficient

CapEx at 2.64% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

✓

Premium margins already priced in

EBIT margin of 33.49% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

↑

Strong near-term revenue growth

Analyst consensus projects 11.35% revenue growth in Year 1, fading to 20.41% by Year 5 and 3.75% by Year 10. Revenue reaches $950.2B by Year 10 (vs $416.2B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $206.87/share (18.8x terminal FCF) while exit multiple gives $334.61/share (36.2x terminal FCF). The 28x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 3.75% growth is more conservative. The base case averages both methods.

🎯

Market pricing in higher long-term growth

To justify $264.72, the market implies 5.32% perpetual growth — 157bps above the model's 3.75%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 77.29% indicates efficient cash generation. FCF reaches $266.1B by Year 10 (28.01% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.11

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)9.48%

Cost of Debt

Pre-tax Cost of Debt1.69%

Tax Rate15.61%

After-tax Cost of Debt1.43%

Equity Weight (E/V)97.24%

Debt Weight (D/V)2.76%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (97.24% × 9.48%) + (2.76% × 1.43%)

= 9.26%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$463.4B	$523.0B	$581.7B	$774.6B	$950.2B
EBIT	$155.2B	$175.2B	$194.8B	$259.4B	$318.3B
Tax	$24.2B	$27.3B	$30.4B	$40.5B	$49.7B
NOPAT	$131.0B	$147.8B	$164.4B	$218.9B	$268.6B
+ Depreciation	$12.7B	$14.3B	$15.9B	$21.2B	$26.1B
- Capex	$12.2B	$13.8B	$15.4B	$20.4B	$25.1B
- Δ NWC	$4.7B	$2.9B	$9.9B	$9.4B	$3.4B
Free Cash Flow	$126.7B	$145.5B	$155.1B	$210.4B	$266.1B
Discount Factor	0.915	0.767	0.642	0.538	0.412
Present Value	$116.0B	$111.5B	$99.6B	$113.2B	$109.8B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$266.1B

Terminal Growth Rate3.75%

WACC9.26%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$5.0T

PV of Terminal Value$2.1T

Exit Multiple Method

Year 10 EBITDA$344.3B

Exit Multiple (EV/EBITDA)28.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$9.6T

PV of Terminal Value$4.0T

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$1.1T

PV of Terminal Value$2.1T

Enterprise Value$3.2T

(-) Net Debt$76.4B

Equity Value$3.1T

Shares Outstanding14.9B

Price per Share$206.87

Exit Multiple Method

PV of Projected FCFs$1.1T

PV of Terminal Value$4.0T

Enterprise Value$5.1T

(-) Net Debt$76.4B

Equity Value$5.0T

Shares Outstanding14.9B

Price per Share$334.61

Pure Model Fair Value

$270.74

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.75%	3.25%	3.75%	4.25%	4.75%
7.26%	$337.23	$350.34	$367.17	$389.61	$420.98
8.26%	$293.33	$301.23	$310.87	$322.93	$338.41
9.26%	$259.55	$264.68	$270.74	$278.01	$286.89
10.26%	$232.29	$235.81	$239.86	$244.58	$250.16
11.26%	$209.60	$212.10	$214.93	$218.17	$221.90

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$194.70

-26.5% vs current

• -25% vs analyst consensus
• Terminal growth: 3.3%
• Beta: 1.38

Base Case

$270.74

2.3% vs current

• Analyst consensus
• Terminal growth: 3.8%
• Beta: 1.11

Bull Case

$366.22

38.3% vs current

• +25% vs analyst consensus
• Terminal growth: 4.3%
• Beta: 0.94

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Technology Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth11.35%

Year 3 Revenue Growth5.81%

Year 5 Revenue Growth20.41%

Year 7 Revenue Growth13.75%

Year 10 Revenue Growth3.75%

Terminal Growth Rate3.75%

Margin & Efficiency

Current EBIT Margin33.49%

Tax Rate15.61%

Historical Capex / Rev2.64%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 28x EV/EBITDA (Technology sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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