Apple DCF | Valurator

For informational and educational purposes only • Not investment advice.

Apple

iPhone, services, devices

Estimated Fair Value

$180.72

Stock price: $333.69

Fair value below stock price

DCF estimates a company's intrinsic value by calculating the present value of its expected future free cash flows. The estimated fair value can then be compared with the current stock price.

Discounted Free Cash Flow Composition (Present Values)

This chart shows each projected Free Cash Flow and the Terminal Value, discounted to their present values using WACC.

Key Valuation Metrics

Revenue Growth Rate

Time Horizon

Terminal Growth

Equity Risk Premium

Range: 2–10%

DCF Formulas

These formulas summarize the main valuation logic behind the model. The detailed calculations are explained step by step below.

DCF Enterprise Value

\text{Enterprise Value} = \sum_{t=1}^{n} \frac{FCF_t}{(1+WACC)^t} + \frac{\text{Terminal Value}}{(1+WACC)^n}

Terminal Value

\text{Terminal Value} = \frac{FCF_{n+1}} {WACC-\text{growth rate}}

Fair Value per Share

\text{Fair Value per Share} = \frac{ \text{Enterprise Value} - \text{Net Debt} }{ \text{Shares Outstanding} }

What is Discounted Cash Flow Valuation?

Discounted Cash Flow (DCF) valuation is one of the most widely used methods for estimating the intrinsic value of a business. Rather than relying on the current market price, it estimates what a company is worth based on its ability to generate Free Cash Flow in the future.

The underlying principle is that a business is worth the cash it can generate for investors over its lifetime. Because money received in the future is worth less than money received today, those future cash flows must be converted into today's value.

DCF valuation focuses on the company's underlying economics rather than short-term market sentiment. However, the estimated value depends heavily on assumptions about future growth, profitability and investment risk.

How the DCF Model Works

Discounted Cash Flow valuation estimates intrinsic value by projecting future free cash flows, discounting those cash flows back to today, adding the present value of the terminal value, adjusting for net debt or net cash, and converting the result into a fair value per share.

Calculate FCF & Estimate FCF Margin

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Forecast Revenue

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Forecast Future Free Cash Flow

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Discount Cash Flows

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Estimate Terminal Value

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Enterprise Value

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Equity Value

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Fair Value Per Share

Key Model Assumptions

• Revenue is projected using historical Revenue Growth (Revenue CAGR).
• Starting Revenue uses trailing twelve-month (TTM) data when four consecutive quarterly periods are available; otherwise, the latest annual Revenue is used.
• Free Cash Flow is estimated as projected Revenue multiplied by the projected Free Cash Flow Margin.
• Starting Free Cash Flow uses trailing twelve-month (TTM) data when four consecutive quarterly periods are available; otherwise, the latest annual Free Cash Flow is used. If the resulting Free Cash Flow is negative or materially inconsistent with recent history, the average of the last three positive annual Free Cash Flow values is used.
• The Target Free Cash Flow Margin is based on the median of up to the five most recent valid historical Free Cash Flow Margins.
• Revenue Growth gradually converges toward the Terminal Growth Rate as the company matures.
• Future Free Cash Flows are discounted using WACC, reflecting both the Cost of Equity and the after-tax Cost of Debt.
• The Risk-Free Rate is based on the U.S. 10-Year Treasury yield published by the Federal Reserve Board.
• Terminal Growth represents the company's sustainable long-term growth rate after the explicit forecast period.
• Enterprise Value is adjusted for Net Debt or Net Cash to estimate Equity Value.

Step 1 — Free Cash Flow Calculation

Free Cash Flow = Operating Cash Flow − Capital Expenditures (CapEx)

$146.7B − $10.0B = $136.7B

Operating Cash Flow: Measures the cash generated by the company's normal business activities

Capital Expenditures: Investments in long-term assets

Discounted Cash Flow (DCF) valuation estimates what a company is worth by valuing the Free Cash Flow it is expected to generate in the future.

Free Cash Flow represents the cash remaining after the company has paid for the investments needed to maintain and grow the business, such as factories, equipment, or technology.

Because Free Cash Flow can be used to repay lenders, pay dividends, repurchase shares, reinvest in the business, or build cash reserves, it forms a good foundation for company valuations.

Step 2 — Free Cash Flow Margin

Starting FCF Margin = Starting Free Cash Flow / Starting Revenue

$136.7B / $466.8B = 29.3%

Target FCF Margin = Median of Recent Historical FCF Margins

26.0%

This DCF estimates future Free Cash Flow by applying an FCF Margin to projected revenue.

The model begins with the Starting FCF Margin, calculated from Starting Free Cash Flow and Starting Revenue. It also calculates a normalized Target FCF Margin based on the median of up to the five most recent valid historical FCF Margins.

In the first forecast year, the model uses the Starting FCF Margin. In each subsequent year, the projected FCF Margin gradually moves toward the Target FCF Margin as the company matures. As a result, the FCF Margin can differ in every forecast year rather than remaining constant throughout the projection period.

The projected FCF Margin used in each forecast year can be seen in the DCF Projection Table.

Step 3 — Revenue Forecast

Historical Revenue Growth (CAGR) = (Ending Revenue / Beginning Revenue)^{1 / Years} − 1

Revenue Growth Rateₜ = Historical Revenue Growth + (Terminal Growth − Historical Revenue Growth) × Growth Fade

Projected Revenue Growth Rate

The forecast starts from the company's trailing twelve-month (TTM) Revenue of $466.8B.

Although Discounted Cash Flow valuation focuses on Free Cash Flow, future revenue must first be estimated because it provides the basis for projecting future cash flows.

The model projects revenue using the company's historical compound annual growth rate (CAGR). As the company matures, this growth gradually declines toward the selected terminal growth rate.

The Revenue Growth Rate and projected Revenue for each forecast year can be seen in the DCF Projection Table.

Step 4 — Forecast Future Free Cash Flow

Revenueₜ = Revenueₜ₋₁ × (1 + Revenue Growthₜ)

Year 1 Revenue = $466.8B × (1 + 13.1%) = $528.1B

FCFₜ = Revenueₜ × FCF Marginₜ

Year 1 Free Cash Flow = $528.1B × 29.3% = $154.6B

Once projected revenue has been estimated, the model calculates future Free Cash Flow.

For each forecast year, projected revenue is multiplied by the corresponding Free Cash Flow Margin to estimate the cash the business is expected to generate.

These projected Free Cash Flows form the foundation of the DCF valuation. The complete yearly calculation can be seen in the DCF Projection Table.

Step 5 — Discount Future Free Cash Flows

Present Valueₜ = FCFₜ / (1 + WACC)^t

Year 1 Present Value = $154.6B / (1 + 10.4%)¹ = $140.1B

Future cash received is worth less than cash received today because it could have been invested elsewhere and because future cash flows are uncertain.

The model therefore discounts each projected Free Cash Flow back to its present value using the Weighted Average Cost of Capital (WACC), which reflects the company's overall required rate of return.

The Discount Factor and resulting Present Value for each forecast year can be seen in the DCF Projection Table.

Step 6 — Estimate Terminal Value

Terminal Cash Flow = Final Year FCF × (1 + Terminal Growth)

Terminal Cash Flow = $279.4B × (1 + 2.5%) = $286.4B

Terminal Value = Terminal Cash Flow / (WACC − Terminal Growth)

Terminal Value = $286.4B / (10.4% − 2.5%) = $3638.5B

Present Value of Terminal Value = Terminal Value / (1 + WACC)ⁿ

Present Value of Terminal Value = $3638.5B / (1 + 10.4%)¹⁰ = $1356.2B

Companies usually continue operating beyond the explicit forecast period. The model therefore estimates the value of all cash flows expected after the selected time horizon using a single Terminal Value.

The Terminal Value assumes that Free Cash Flow continues growing at a stable and sustainable long-term Terminal Growth Rate.

Because the Terminal Value represents value at the end of the forecast period, it is also discounted back to its present value using WACC.

Step 7 — Calculate Enterprise Value

Enterprise Value = Σ Present Value of Free Cash Flows + Present Value of Terminal Value

Sum of Present Values of Forecast Cash Flows:
$1320.0B

Present Value of Terminal Value:
$1356.2B

Enterprise Value:
$1320.0B + $1356.2B = $2676.2B

Enterprise Value represents the estimated value of the company's operating business based on the present value of all projected Free Cash Flows and the Terminal Value.

It measures the value of the business before considering how it is financed through debt and cash.

The individual discounted cash flows and their combined present value can be seen in the DCF Projection Table.

Step 8 — Calculate Equity Value

Net Debt = Total Debt − Cash & Short-Term Investments

Net Debt = $84.3B − $62.4B = $21.9B

Equity Value = Enterprise Value − Net Debt

Equity Value = $2676.2B − $21.9B = $2654.3B

Enterprise Value represents the value of the entire operating business. To estimate the value attributable to shareholders, the model adjusts for the company's Net Debt.

Companies with more debt than cash have lower Equity Value, while companies holding more cash than debt can have higher Equity Value.

Step 9 — Calculate Fair Value per Share

Fair Value per Share = Equity Value / Shares Outstanding

Equity Value:
$2654.3B

Shares Outstanding:
14.69B shares

Fair Value per Share:
$2654.3B / 14.69B = $180.72

The final step converts the company's total Equity Value into an estimated Fair Value per Share.

This estimated Fair Value can then be compared with the current stock price to assess whether the shares appear undervalued, fairly valued, or overvalued under the selected assumptions.

DCF Projection Table

The table shows the complete forecast used in the valuation, including projected revenue, Free Cash Flow, discounted cash flows, Terminal Value, Enterprise Value and Fair Value Per Share.

Year	Revenue Growth	Revenue	FCF Margin	Free Cash Flow	Discount Factor	Present Value
Y1	13.1%	$528.1B	29.3%	$154.6B	0.906	$140.1B
Y2	12.7%	$595.4B	29.2%	$173.6B	0.821	$142.5B
Y3	12.0%	$667.0B	28.9%	$193.0B	0.744	$143.5B
Y4	11.1%	$741.0B	28.6%	$212.3B	0.674	$143.0B
Y5	10.0%	$815.0B	28.3%	$230.7B	0.611	$140.8B
Y6	8.7%	$886.1B	27.9%	$247.4B	0.553	$136.8B
Y7	7.3%	$951.2B	27.5%	$261.4B	0.501	$131.0B
Y8	5.8%	$1006.8B	27.0%	$272.0B	0.454	$123.5B
Y9	4.2%	$1049.3B	26.5%	$278.2B	0.411	$114.5B
Y10	2.5%	$1075.5B	26.0%	$279.4B	0.373	$104.2B
Total Present Value of Forecast Free Cash Flows						$1320.0B
Terminal Value	2.5%		26.0%	$286.4B	0.373	$1356.2B
Terminal Value = $286.4B / (10.4% − 2.5%) = $3638.5B before being discounted back to $1356.2B.
Enterprise Value PV Forecast Cash Flows + PV Terminal Value						$1320.0B + $1356.2B = $2676.2B
Equity Value Enterprise Value − Net Debt						$2676.2B − $21.9B = $2654.3B
Estimated Fair Value Per Share = Equity Value / Shares Outstanding = $2654.3B / 14.69B shares = $180.72