Apple’s DCF Indicates $179.13 Intrinsic Value, Signals 40% Overvaluation
Apple’s intrinsic value based on the Discounted Earnings DCF model is $179.13 compared with a market price of $250.12, implying a margin of safety of -39.63%. A traditional free cash flow DCF yields an intrinsic value of $157.66 and a margin of safety of -58.65%, indicating the shares remain modestly overvalued.
1. Discounted Earnings Model Analysis
The two-stage Discounted Earnings DCF uses EPS of $7.91 and an 11% discount rate, projecting 15.2% annual EPS growth for 10 years followed by 4% growth for another decade. This yields present values of $97.58 for the growth stage and $81.56 for the terminal stage, totaling $179.13 per share.
2. Free Cash Flow DCF Comparison
A traditional DCF based on trailing twelve-month free cash flow produces an intrinsic value of $157.66 per share. This alternative model, using similar discount parameters, results in a -58.65% margin of safety versus the current trading price, reinforcing the view of modest overvaluation.