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Enterprise Value-to-Invested Capital (EV/IC)

For informational and educational purposes only • Not investment advice.

Apple

iPhone, services, devices

Estimated Fair Value

$178.09

Stock price: $333.69

Fair value below stock price

This model estimates a company's value by applying its historical Enterprise Value-to-Invested Capital multiple to its current Invested Capital.

Historical Annual EV/IC Multiples

This chart shows the company's historical Enterprise Value-to-Invested Capital multiple by year.

2016: 4.01x EV/IC4.01x20162017: 4.89x EV/IC4.89x20172018: 4.96x EV/IC4.96x20182019: 13.11x EV/IC13.11x20192020: 25.62x EV/IC25.62x20202021: 23.40x EV/IC23.40x20212022: 17.34x EV/IC17.34x20222023: 27.07x EV/IC27.07x20232024: 38.83x EV/IC38.83x20242025: 34.56x EV/IC34.56x2025

Key Valuation Metrics

Selected EV/IC Multiple

Notes

• The current EV/Invested Capital multiple is meaningfully above the historical median, meaning the market currently assigns a higher value to each dollar of invested capital than it has historically.
• The historical EV/Invested Capital range is wide, meaning the valuation is sensitive to the multiple selected.

What is EV/Invested Capital?

Enterprise Value-to-Invested Capital (EV/IC) compares the market value of a company's operating business with the capital invested in that business. It shows how much Enterprise Value the market assigns to each dollar of Invested Capital.

A company that consistently earns attractive returns on its Invested Capital may trade at a higher EV/IC multiple, while a company that earns weak returns on capital may trade closer to or below the value of its invested capital. The multiple should therefore be interpreted alongside the company's profitability, growth and ability to create value on incremental capital.

This valuation uses the company's historical EV/IC multiples as a benchmark and applies the selected multiple to current Invested Capital to estimate Enterprise Value and Fair Value per Share.

How EV/Invested Capital Valuation Works

Calculate Historical EV/IC
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Select the EV/IC Multiple
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Estimate Fair Value Per Share
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Compare With Current Valuation

EV/Invested Capital Formula

EV/IC=Enterprise ValueInvested Capital \text{EV/IC} = \frac{ \text{Enterprise Value} }{ \text{Invested Capital} }
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}
Invested Capital=Book Value+Total Debt−Cash & Short-Term Investments \text{Invested Capital} = \text{Book Value} + \text{Total Debt} - \text{Cash \& Short-Term Investments}

Key Model Assumptions

• Invested Capital is calculated as Book Value plus Total Debt minus Cash & Short-Term Investments.
• Enterprise Value is calculated from Market Capitalization adjusted for Net Debt or Net Cash.
• The 10 most recent valid historical EV/IC multiples are used to estimate the company's typical valuation multiple.
• The historical median EV/IC forms the Base valuation assumption.
• Conservative and optimistic scenarios adjust the historical median EV/IC.
• Current Invested Capital is assumed to provide a meaningful measure of the capital employed in the operating business.
• Historical EV/IC multiples may become less representative when acquisitions, asset write-downs, accounting changes or major changes in the company's capital base occur.

Step 1 — Calculate Historical EV/Invested Capital Multiples

Historical Invested Capital = Historical Book Value + Historical Total Debt − Historical Cash & Short-Term Investments

Historical Enterprise Value = Historical Market Cap + Historical Net Debt

Historical EV/IC = Historical Enterprise Value / Historical Invested Capital
Historical Median EV/IC = Median of the 10 most recent valid historical EV/IC multiples
Historical Median EV/IC = 20.37x

The model calculates historical Invested Capital from Book Value, Total Debt and Cash. Historical Enterprise Value is then calculated from Market Capitalization and Net Debt or Net Cash. Dividing Enterprise Value by Invested Capital produces the historical EV/IC multiple. The 10 most recent valid observations are used to determine Apple's typical historical valuation. The historical median EV/IC is 20.37x.

Step 2 — Select the Valuation Multiple

Selected EV/IC = Historical Median EV/IC × Scenario Adjustment (Base)
Selected EV/IC = 20.37x × 100% = 20.37x

The selected scenario adjusts the historical median EV/IC multiple to reflect a more conservative or optimistic valuation assumption. Under the base scenario, the model uses an EV/IC multiple of 20.37x.

Step 3 — Estimate Fair Value Per Share

Fair Enterprise Value = Current Invested Capital × Selected EV/IC
Fair Enterprise Value = $129.5B × 20.37x = $2637.6B
Fair Equity Value = Fair Enterprise Value − Net Debt
Fair Equity Value = $2637.6B − $21.9B = $2615.7B
Fair Value Per Share = Fair Equity Value / Shares Outstanding
Fair Value Per Share = $2615.7B / 14.69B = $178.09

The selected EV/IC multiple is applied to Apple's current Invested Capital to estimate Fair Enterprise Value. Fair Enterprise Value is then adjusted for Net Debt or Net Cash to estimate Fair Equity Value, which is divided by Shares Outstanding to calculate an estimated Fair Value of $178.09 per share.

Step 4 — Compare With Current Valuation

Current EV/IC = Current Enterprise Value / Current Invested Capital
Current EV/IC = $4923.0B / $129.5B = 38.03x
Current EV/IC = 38.03x
Historical Median EV/IC = 20.37x

Historical EV/IC Range = 4.01x–38.83x

Selected EV/IC = 20.37x

The selected EV/IC multiple is compared with Apple's current and historical valuation levels. The company currently trades at 38.03x Invested Capital, compared with a historical median of 20.37x and a historical range of 4.01x to 38.83x. This provides context for whether the selected multiple is conservative, typical, or optimistic relative to the company's own history.