EPS-Based DCF Values Apple at $179.13, Signals 38.9% Overvaluation
Apple’s EPS-based DCF model yields an intrinsic value of $179.13 per share, implying a −38.9% margin of safety against its $248.80 trading price. A free cash flow–based DCF produces a $157.66 value and −57.8% margin, indicating modest overvaluation under both metrics.
1. Earnings-Based DCF Valuation
Apple’s EPS-based DCF model calculates an intrinsic value of $179.13 per share based on a discounted earnings methodology. Compared with its $248.80 share price, this implies a margin of safety of −38.9%, signaling modest overvaluation.
2. Model Assumptions and Stages
The two-stage earnings-based DCF applies an 11% discount rate—5% risk-free plus a 6% equity risk premium—over a 10-year growth stage at 15.2% EPS growth and a 10-year terminal stage at 4% growth. EPS without NRI of $7.91 anchors the calculations.
3. Free Cash Flow DCF Results
A traditional free cash flow model yields a $157.66 intrinsic value per share using trailing twelve-month free cash flow and the same discount rate, resulting in a −57.8% margin of safety. Both valuation approaches indicate modest overvaluation.