ValuratorExplore Company Valuations

Enterprise Value-to-Free Cash Flow (EV/FCF)

For informational and educational purposes only • Not investment advice.

Apple

iPhone, services, devices

Estimated Fair Value

$191.89

Stock price: $333.69

Fair value below stock price

This model estimates a company's fair value by applying a selected historical EV/FCF multiple to its Free Cash Flow to the Firm (FCFF).

Historical EV/FCF Multiples

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

2016: 23.33x EV/FCF23.33x20162017: 17.94x EV/FCF17.94x20172018: 10.68x EV/FCF10.68x20182019: 68.99x EV/FCF68.99x20192020: 27.00x EV/FCF27.00x20202021: 23.22x EV/FCF23.22x20212022: 16.57x EV/FCF16.57x20222023: 37.46x EV/FCF37.46x20232024: 32.55x EV/FCF32.55x20242025: 38.64x EV/FCF38.64x2025

Key Valuation Metrics

Selected EV/FCF Multiple

Notes

• The current EV/FCF multiple is meaningfully above the historical median, suggesting the company's operating business may be valued above its historical EV/FCF range.
• The historical EV/FCF range is wide, meaning the valuation is sensitive to which historical multiple is used.

What is Enterprise Value-to-Free Cash Flow (EV/FCF) Valuation?

Enterprise Value-to-Free Cash Flow (EV/FCF) Valuation estimates a company's Fair Value based on its Free Cash Flow to the Firm (FCFF) and the EV/FCF multiple applied to that cash flow.

The EV/FCF ratio compares a company's Enterprise Value with its Free Cash Flow to the Firm. FCFF represents cash generated by the operating business that is available to both shareholders and lenders.

Historical EV/FCF 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 FCFF.

EV/FCF Valuation is most useful for companies with positive and relatively stable FCFF, but it may be less reliable when cash generation is highly volatile or changes materially over time.

How the EV/FCF Model Works

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

Historical FCFF & Enterprise Values
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Calculate Historical EV/FCF
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Select Valuation EV/FCF
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Estimate Fair Enterprise Value
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Fair Value per Share

EV/FCF Formula

EV/FCF=Enterprise ValueFree Cash Flow to the Firm (FCFF) \text{EV/FCF} = \frac{ \text{Enterprise Value} }{ \text{Free Cash Flow to the Firm (FCFF)} }
Enterprise Value=Market Capitalization+Net Debt \text{Enterprise Value} = \text{Market Capitalization} + \text{Net Debt}
Net Debt=Total Debt−Cash & Short-Term Investments \text{Net Debt} = \text{Total Debt} - \text{Cash \& Short-Term Investments}

Key Model Assumptions

• The company must have positive Free Cash Flow to the Firm (FCFF).
• FCFF is based on trailing twelve-month (TTM) financial data when sufficient quarterly data is available; annual data may be used as a fallback.
• Historical EV/FCF multiples require valid FCFF, market value and balance sheet data.
• The 10 most recent valid historical EV/FCF multiples are used to estimate the company's typical valuation multiple.
• The historical median EV/FCF forms the Base valuation assumption.
• Conservative and optimistic scenarios adjust the historical median EV/FCF.
• Historical EV/FCF multiples may not remain representative if the company's cash generation, capital structure or operating performance changes materially.

Step 1 — Calculate Historical EV/FCF Multiples

Historical Enterprise Value = Historical Market Cap + Historical Net Debt

Historical EV/FCF = Historical Enterprise Value / Historical FCFF
Historical Median EV/FCF = Median of the 10 most recent valid historical EV/FCF multiples
Historical Median EV/FCF = 25.17x

The model calculates historical Enterprise Value by combining historical market capitalization with historical net debt. It then divides historical Enterprise Value by historical Free Cash Flow to the Firm (FCFF). The 10 most recent valid EV/FCF multiples are used to determine the company's typical historical valuation multiple. For Apple, the historical median EV/FCF is 25.17x.

Step 2 — Select the Valuation Multiple

Selected EV/FCF = Historical Median EV/FCF × Scenario Adjustment (Base)
Selected EV/FCF = 25.17x × 100% = 25.17x

The selected scenario adjusts the historical median EV/FCF multiple to reflect a more conservative or optimistic valuation assumption. Under the base scenario, the model uses an EV/FCF multiple of 25.17x.

Step 3 — Estimate Fair Value per Share

Fair Enterprise Value = FCFF × Selected EV/FCF
Fair Enterprise Value = $112.9B × 25.17x = $2840.3B
Fair Equity Value = Fair Enterprise Value − Net Debt
Fair Equity Value = $2840.3B − $21.9B = $2818.4B
Fair Value per Share = Fair Equity Value / Shares Outstanding
Fair Value per Share = $2818.4B / 14.69B = $191.89

The selected EV/FCF multiple is applied to Apple's current Free Cash Flow to the Firm 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 $191.89.

Step 4 — Compare With the Current Market Valuation

Current EV/FCF = Current Enterprise Value / FCFF
Current EV/FCF = $4923.0B / $112.9B = 43.62x
Valuation Gap = Fair Value per Share / Current Price − 1
Valuation Gap = $191.89 / $333.69 − 1 = -42.5%

Current EV/FCF shows the multiple currently assigned to Apple's Free Cash Flow to the Firm. The company currently trades at 43.62x compared with a historical median of 25.17x.

The Valuation Gap compares the estimated Fair Value with the current stock price of $333.69. Based on the selected EV/FCF scenario, the Valuation Gap is -42.5%.