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Enterprise Value-to-Sales (EV/Sales)

For informational and educational purposes only • Not investment advice.

Apple

iPhone, services, devices

Estimated Fair Value

$209.44

Stock price: $333.69

Fair value below stock price

This model estimates a company's fair value by applying its historical Enterprise Value-to-Sales multiple to current revenue.

Historical EV/Sales Ratios

This chart shows the company's historical Enterprise Value-to-Sales ratio by year.

2016: 2.75x EV/Sales2.75x20162017: 3.74x EV/Sales3.74x20172018: 2.90x EV/Sales2.90x20182019: 4.94x EV/Sales4.94x20192020: 8.10x EV/Sales8.10x20202021: 8.01x EV/Sales8.01x20212022: 5.38x EV/Sales5.38x20222023: 7.89x EV/Sales7.89x20232024: 9.77x EV/Sales9.77x20242025: 9.77x EV/Sales9.77x2025

Key Valuation Metrics

Selected EV/Sales Multiple

Notes

• The current EV/Sales multiple is meaningfully above the historical median, suggesting the stock may be overvalued relative to its historical EV/Sales valuation.
• The historical EV/Sales range is wide, meaning the valuation is sensitive to which historical multiple is used.

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

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

The EV/Sales ratio compares a company's Enterprise Value with its Revenue. Unlike Price-to-Sales, it considers both equity value and net debt or net cash.

Historical EV/Sales ratios show the valuation multiples 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 Revenue.

EV/Sales Valuation can be useful for companies with negative or volatile earnings, but it does not directly account for profitability, margins or operating efficiency.

How the EV/Sales Model Works

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

Historical Revenue & EV Data
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Calculate Historical EV/Sales
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Select Valuation EV/Sales
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Estimate Fair Enterprise Value
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Fair Value per Share

EV/Sales Formula

EV/Sales=Enterprise ValueRevenue \text{EV/Sales} = \frac{ \text{Enterprise Value} }{ \text{Revenue} }
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 current Revenue.
• Current Revenue is based on trailing twelve-month (TTM) revenue when four consecutive quarterly periods are available; otherwise, the latest annual revenue is used.
• Historical EV/Sales ratios require valid Revenue, market value and balance sheet data.
• The 10 most recent valid historical EV/Sales ratios are used to estimate the company's typical valuation multiple.
• The historical median EV/Sales forms the Base valuation assumption.
• Conservative and optimistic scenarios adjust the historical median EV/Sales.
• Historical EV/Sales multiples may not remain representative if the company's growth, margins, capital structure or profitability changes materially.

Step 1 — Calculate Historical EV/Sales Ratios

Historical Enterprise Value = Historical Market Cap + Historical Net Debt
Historical EV/Sales = Historical Enterprise Value / Historical Revenue
Historical Median EV/Sales = Median of the 10 most recent valid historical EV/Sales ratios
Historical Median EV/Sales = 6.64x

The model calculates historical Enterprise Value and historical EV/Sales ratios. The median of the 10 most recent valid EV/Sales ratios is then used as Apple's historical valuation benchmark. The resulting median EV/Sales is 6.64x.

Step 2 — Select the Valuation Multiple

Selected EV/Sales = Historical Median EV/Sales × Scenario Adjustment (Base)
Selected EV/Sales =6.64x × 100% = 6.64x

The selected scenario adjusts the historical median EV/Sales to determine the valuation multiple used to estimate Fair Value. Under the base scenario, the model uses an EV/Sales multiple of 6.64x.

Step 3 — Estimate Fair Value per Share

Fair Enterprise Value = Current Revenue × Selected EV/Sales
Fair Enterprise Value = $466.8B × 6.64x = $3098.1B
Fair Equity Value = Fair Enterprise Value − Net Debt
Fair Equity Value = $3098.1B − $21.9B = $3076.2B
Fair Value per Share = Fair Equity Value / Shares Outstanding
Fair Value per Share = $3076.2B / 14.69B = $209.44

The selected EV/Sales multiple is applied to Apple's current Revenue 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 $209.44.

Step 4 — Compare With the Current Market Valuation

Current Enterprise Value = Current Market Cap + Current Net Debt
Current EV/Sales = Current Enterprise Value / Current Revenue
Current EV/Sales = $4923.0B / $466.8B = 10.55x
Valuation Gap = Fair Value per Share / Current Price − 1
Valuation Gap = $209.44 / $333.69 − 1 = -37.2%

Current EV/Sales shows the multiple currently assigned to Apple's Revenue. The company currently trades at 10.55x compared with a historical median of 6.64x.

The Valuation Gap compares the estimated Fair Value with the current stock price of $333.69. Under the current assumptions, the Valuation Gap is -37.2%.