At Valuecruncher we have not looked at Apple (NASDAQ:AAPL) since late last year. $AAPL is now trading at US$136.09. We felt it was time to revisit the valuation of $AAPL from an intrinsic value perspective - and most importantly the assumptions that we are using in our valuation.
Valuecruncher produces a valuation of US$140.57 for $AAPL. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 3.3% above the current share price of US$136.09. $AAPL appears reasonably valued at the moment.
- Revenue: Reuters aggregates 32 analysts covering $AAPL and the mean estimates of 2009 and 2010 revenues are US$35.5 billion and US$41.4 billion respectively. For our analysis we have used US$35.5 billion in 2009, US$41.25 billion in 2010 and US$47.0 billion in 2011.
- Profitability: We have used an EBITDA margin of 20.5% to 2011. Reuters has $AAPL‘s EBITD margin at 21.4% last year and an average of 16.8% over the last five-years.
- Capital Expenditure: We have assumed capital expenditures of US$1.0 billion in 2009, US$1.15 billion in 2010 then US$1.25 billion per annum moving forward.
- Discount Rate: 10.0%.
- Terminal Growth Rate: 4.5%. In our assumptions we have 2010/11 revenue growth at 13.9% - we have assumed that growth eventually slows to a 3.5% long-term stable growth rate.
Our analysis incorporates the cash on the $AAPL balance sheet – Valuecruncher calculates a net debt number.
Play with our assumptions – what does your analysis say?