Apple’s DCF Intrinsic Value at $179.13 Implies 42.8% Overvaluation
Apple’s intrinsic value per EPS-based DCF is $179.13 with a –42.79% margin versus a $255.78 trading price. The free cash flow DCF model yields $157.66 intrinsic value and a –62.24% margin, indicating modest overvaluation.
1. EPS-based DCF Valuation
Apple’s intrinsic value per the two-stage earnings-based DCF model is $179.13, based on $7.91 EPS without NRI, an 11% discount rate, 15.2% growth for ten years and 4% for the terminal decade. This implies a margin of safety of –42.79% compared with the $255.78 share price.
2. Assumptions and Methodology
The model uses $7.91 EPS without NRI and an 11% discount rate derived from a 4.05% 10-year Treasury rate plus a 6% equity risk premium. It applies a 15.2% compound annual EPS growth rate for ten years, capped between 5% and 20%, followed by a 4% terminal growth rate for another ten years.
3. Free Cash Flow DCF Valuation
A traditional free cash flow per share DCF yields an intrinsic value of $157.66, based on trailing twelve-month FCF, the same 11% discount rate and identical growth assumptions. This produces a –62.24% margin of safety, reinforcing the view of modest overvaluation.