Apple Stock Overvalued by 68.3%, DCF Analysis Suggests
GuruFocus has conducted an analysis of Apple Inc (AAPL) using discounted cash flow (DCF) models. According to this model, the intrinsic value of AAPL is estimated at $197.48, significantly lower than its current price of $332.27. This indicates that the stock is overvalued by 68.3%.
The DCF earnings-based model assumes a growth rate of 15.2% for the first ten years, followed by a terminal growth rate of 4%. The discount rate used is 11%, derived from the risk-free rate and equity risk premium. This model values the stock based on projected earnings growth during the growth phase and accounts for the value beyond this period in the terminal phase.
The free cash flow (FCF)-based intrinsic value for AAPL is estimated at $176.01, which aligns with the earnings-based DCF model. Both models agree that the stock is significantly overvalued. The GF Value metric, a proprietary measure of GuruFocus, calculates AAPL's value at $285.41.
Apple Inc's GF Score , a measure of financial strength, profitability, growth potential, valuation, and momentum, stands at 95/100. However, its predictability rank is 2 out of 5 stars, suggesting that the DCF model may be less reliable for this stock.