Apple EV/EBIT | Valurator

For informational and educational purposes only • Not investment advice.

Apple

iPhone, services, devices

Estimated Fair Value

$235.90

Stock price: $333.69

Fair value below stock price

This model estimates a company's fair value by applying its historical EV/EBIT multiple to current EBIT.

Historical EV/EBIT Multiples

This chart shows the company's historical EV/EBIT multiple by year.

Key Valuation Metrics

Selected EV/EBIT Multiple

Notes

• The current EV/EBIT multiple is meaningfully above the historical median, suggesting the stock may be trading at a higher valuation than it has historically.

• The historical EV/EBIT range is wide, meaning the valuation is sensitive to which historical multiple is used.

What is Enterprise Value-to-EBIT (EV/EBIT) Valuation?

Enterprise Value-to-EBIT (EV/EBIT) Valuation estimates a company's Fair Value based on its EBIT and the EV/EBIT multiple applied to that EBIT.

The EV/EBIT ratio compares a company's Enterprise Value with its EBIT. It shows how the market values the company's operating profit before interest and taxes.

Historical EV/EBIT multiples show the valuation levels at which the company's operating business has traded in the past. They can be used as a reference for estimating Fair Enterprise Value from current EBIT.

EV/EBIT Valuation is most useful for companies with positive and relatively stable EBIT, but it may be less reliable when operating profit is highly cyclical or changes materially over time.

How the EV/EBIT Model Works

The EV/EBIT model estimates fair value by calculating the company's historical EV/EBIT multiples, selecting a valuation multiple, applying it to EBIT, and converting Enterprise Value into equity value per share.

Historical EBIT & Enterprise Value

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Calculate Historical EV/EBIT

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Select Valuation EV/EBIT

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Estimate Fair Enterprise Value

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Fair Value per Share

EV/EBIT Formula

\text{EV/EBIT} = \frac{ \text{Enterprise Value} }{ \text{EBIT} }

\text{Enterprise Value} = \text{Market Capitalization} + \text{Net Debt}

\text{Net Debt} = \text{Total Debt} - \text{Cash \& Short-Term Investments}

Key Model Assumptions

• The company must have positive EBIT.
• EBIT is based on trailing twelve-month (TTM) operating results when four consecutive quarterly periods are available; otherwise, the latest annual EBIT is used.
• Historical EV/EBIT multiples require valid EBIT, market value and balance sheet data.
• The 10 most recent valid historical EV/EBIT multiples are used to estimate the company's typical valuation multiple.
• The historical median EV/EBIT forms the Base valuation assumption.
• Conservative and optimistic scenarios adjust the historical median EV/EBIT.
• Historical EV/EBIT multiples may not remain representative if the company's profitability, capital structure or operating performance changes materially.

Step 1 — Calculate Historical EV/EBIT Multiples

Historical Enterprise Value = Historical Market Cap + Historical Net Debt

Historical EV/EBIT = Historical Enterprise Value / Historical EBIT

Historical Median EV/EBIT = Median of the 10 most recent valid historical EV/EBIT multiples
Historical Median EV/EBIT = 22.36x

The model calculates historical EV/EBIT multiple by dividing historical Enterprise Value by historical EBIT. It then uses the 10 most recent valid EV/EBIT multiples to determine the company's typical historical valuation multiple. For Apple, the historical median EV/EBIT is 22.36x.

Step 2 — Select the Valuation Multiple

Selected EV/EBIT = Historical Median EV/EBIT × Scenario Adjustment (Base)

Selected EV/EBIT = 22.36x × 100% = 22.36x

The selected scenario adjusts the historical median EV/EBIT multiple to reflect a more conservative or optimistic valuation assumption. Under the base scenario, the model uses an EV/EBIT multiple of 22.36x.

Step 3 — Estimate Fair Value per Share

Fair Enterprise Value = EBIT × Selected EV/EBIT

Fair Enterprise Value = $155.9B × 22.36x = $3486.6B

Fair Equity Value = Fair Enterprise Value − Net Debt

Fair Equity Value = $3486.6B − $21.9B = $3464.7B

Fair Value per Share = Fair Equity Value / Shares Outstanding

Fair Value per Share = $3464.7B / 14.69B = $235.90

The selected EV/EBIT multiple is applied to Apple's EBIT to estimate Fair Enterprise Value. Net Debt is then subtracted to determine Fair Equity Value, which is divided by Shares Outstanding to estimate a Fair Value per Share of $235.90.

Step 4 — Compare With the Current Market Valuation

Current EV/EBIT = Current Enterprise Value / Current EBIT

Current EV/EBIT = $4923.0B / $155.9B = 31.58x

Valuation Gap = Fair Value per Share / Current Price − 1

Valuation Gap = $235.90 / $333.69 − 1 = -29.3%

Current EV/EBIT shows the multiple currently assigned to Apple's EBIT. The company currently trades at 31.58x compared with a historical median of 22.36x.

The Valuation Gap compares the estimated Fair Value with the current stock price of $333.69. Under the current assumptions, the Valuation Gap is -29.3%.