Apollo Global Management, Inc.APONYSE

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DCF Valuation

⚠️Model Warnings

•Revenue projections show 72% decline from peak. Analyst estimates may reflect secular headwinds or transition period.

DCF Valuation Summary

Sell

Fair Value: $81.41 per share(market-calibrated)

-24.0%

Upside to Fair Value

Current

$107.08

Pure Model

$79.56

Fair Value

$81.41

Bull Case

$57.95

Bear Case

$92.07

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

6.50%

Calibrated Growth

3.50%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $79.56.

What's Driving This Ratingfor APO

✓

CapEx already efficient

CapEx at 0.18% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

↑

Margin expansion modeled

Current EBIT margin is 27.82% — below the sector mature average of 34.39%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $2.7B (27.95% margin).

→

Moderate revenue growth

Analyst consensus projects -22.95% revenue growth, fading to 2.50% by Year 10. Revenue reaches $9.8B (vs $30.3B today).

🎯

Market pricing in higher long-term growth

To justify $107.08, the market implies 6.50% perpetual growth — 400bps above the model's 2.50%. 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 88.79% indicates efficient cash generation. FCF reaches $2.6B by Year 10 (26.24% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.56

Market Risk Premium4.50%

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

Cost of Equity (Re)11.54%

Cost of Debt

Pre-tax Cost of Debt2.76%

Tax Rate10.35%

After-tax Cost of Debt2.47%

Equity Weight (E/V)82.97%

Debt Weight (D/V)17.03%

WACC Calculation

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

WACC = (82.97% × 11.54%) + (17.03% × 2.47%)

= 9.99%

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	$23.3B	$30.3B	$8.6B	$9.1B	$9.8B
EBIT	$6.5B	$8.4B	$2.4B	$2.5B	$2.7B
Tax	$672M	$873M	$249M	$262M	$283M
NOPAT	$5.8B	$7.6B	$2.2B	$2.3B	$2.4B
+ Depreciation	$375M	$487M	$139M	$146M	$157M
- Capex	$41M	$53M	$15M	$16M	$17M
- Δ NWC	-$695M	$336M	$21M	$22M	$24M
Free Cash Flow	$6.9B	$7.7B	$2.3B	$2.4B	$2.6B
Discount Factor	0.909	0.751	0.621	0.513	0.386
Present Value	$6.2B	$5.8B	$1.4B	$1.2B	$989M

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

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$2.6B

Terminal Growth Rate2.50%

WACC9.99%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$35.1B

PV of Terminal Value$13.5B

Exit Multiple Method

Year 10 EBITDA$2.9B

Exit Multiple (EV/EBITDA)12.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$34.7B

PV of Terminal Value$13.4B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$27.7B

PV of Terminal Value$13.5B

Enterprise Value$41.2B

(-) Net Debt-$7.2B

Equity Value$48.4B

Shares Outstanding608M

Price per Share$79.70

Exit Multiple Method

PV of Projected FCFs$27.7B

PV of Terminal Value$13.4B

Enterprise Value$41.1B

(-) Net Debt-$7.2B

Equity Value$48.3B

Shares Outstanding608M

Price per Share$79.43

Pure Model Fair Value

$79.56

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

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
7.99%	$89.06	$90.42	$92.02	$93.94	$96.30
8.99%	$83.08	$84.01	$85.08	$86.33	$87.80
9.99%	$78.16	$78.82	$79.56	$80.42	$81.40
10.99%	$74.00	$74.48	$75.02	$75.63	$76.32
11.99%	$70.41	$70.77	$71.17	$71.62	$72.11

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

$92.07

-14.0% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.96

Base Case

$79.56

-25.7% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 1.56

Bull Case

$57.95

-45.9% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 1.33

Key Assumptions & Drivers• Financial Services Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-22.95%

Year 3 Revenue Growth12.47%

Year 5 Revenue Growth2.50%

Year 7 Revenue Growth2.50%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin27.82%

Terminal EBIT Margin34.39%

Tax Rate10.35%

Historical Capex / Rev0.18%

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: 12x EV/EBITDA (Financial Services 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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