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Stock valuation apple

To value stock we will be using the capital pricing model.

Ck valuation formula :

Apple Inc (NASDAQ:AAPL)

543.99
-0.44 (-0.08%)
Feb 14 - Close

543.99
Data as of Feb 14

-0.44 / -0.08%

TODAY|

385.10
|

52-Week

-3.04%

Range

Todays Change

Year-to-Date

575.14

Financial Data of Apple Inc


Annual Rates (per share)

10 yrs

5 yrs

12 months

Revenue Growth (%)

38.00

42.80

8.90

EBITDA Growth (%)

64.50

49.50

-1.60

EBIT Growth (%)

67.50

47.40

-7.90

Earning Growth (%)

65.30

49.50

-8.60

Free Cash Flow Growth (%)

55.60

50.10

-1.20

Book Value Growth (%)

43.50

43.40

7.10

First should calculate the price and intrinsic value of the stock :

V0=DIV1+P1/1+r
Calculation for 1 year
703.1904=(3.05+700)/1+14.04/100
Calculation for 2 years
351.6654 =(3.05+700)/2+14.04/100

DDM model

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon
present value of some measure of cash flow. Dividends are the cleanest and most straightforward
measure of cash flow because these are clearly cash flows that go directly to the investor.

Apple Inc., dividends per share (DPS) forecast


DPS(t) or
TV(t)
0
DPS(0)
11.40
1
DPS(1)
14.79
2
DPS(2)
18.53
3
DPS(3)
22.37
4
DPS(4)
26.00
5
DPS(5)
29.04
5
TV(5)
1,385.69
Intrinsic value of Apple's common stock (per share)
Current share price
Year

Value

Present value
at 14.04%
12.97
14.25
15.08
15.37
15.06
718.51
$791.24
$543.99

Required rate of return

Required Rate of Return (r)


Assumptions
Rate of return on LT Treasury Composite1
Expected rate of return on market portfolio2
Systematic risk () of Apple's common stock

Required rate of return on Apple's common stock3

http://news.cnet.com/8301-13579_3-57618537-37/apples-stock-buyback-not-alasting-tonic-says-analyst/