Valuing Apple with a DCF and comps
This walks through what ValueDesk's stock tools say about Apple, one step at a time. Two methods are used. A discounted cash flow (DCF) asks what the cash Apple will make is worth today. Comparable companies (comps) ask what similar companies sell for. Then the two are combined into one fair value and a price to buy below.
The DCF here is a mechanical starting point built from the filings. It is not a forecast, and the point of the example is to show how to read it, not to tell you what Apple is worth.
1. What the business earns
Start with the record. Revenue is what customers paid. EBIT margin is operating profit as a share of revenue, before interest and tax. Apple keeps about 30 cents of every sales dollar as operating profit, which is very high for a company that sells hardware.
| Year | Revenue | Growth | EBIT margin |
|---|---|---|---|
| FY2020 | $274,515M | n/a | 24.1% |
| FY2021 | $365,817M | 33.3% | 29.8% |
| FY2022 | $394,328M | 7.8% | 30.3% |
| FY2023 | $383,285M | -2.8% | 29.8% |
| FY2024 | $391,035M | 2.0% | 31.5% |
| FY2025 | $416,161M | 6.4% | 32.0% |
| LTM to 2026-06-27 | $466,823M | 33.2% |
Over five years revenue grew 8.7% a year compounded, but most of that was the jump in fiscal 2021. The last three years averaged 1.9%. The twelve months to 2026-06-27 were stronger again. The margin has crept up from 24.1% to 32.0%.
2. The DCF starting point
The SEC files Apple under industry code 3571 (electronic computers). ValueDesk maps that to Damodaran's Computers/Peripherals industry, whose Beta (unlevered) is 1.32. Beta measures how much a stock swings with the market; that number drives the discount rate.
| Base revenue, LTM | $466,823M |
|---|---|
| Revenue growth, year 1 | 8.70% |
| Revenue growth, year 5 | 2.50% |
| EBIT margin | 33.20% |
| D&A, % of revenue | 2.90% |
| Capex, % of revenue | 2.80% |
| Net working capital, % of revenue | -16.10% |
| Tax rate | 25.00% |
| WACC | 10.73% |
| Terminal growth | 2.50% |
- Base year: trailing twelve months to 2026-06-27.
- Revenue growth starts at the 5 year revenue CAGR of 8.7% and fades in a straight line to 2.5% terminal growth.
- EBIT margin holds at the trailing twelve month 33.2%.
- D&A holds at its 3 year average of 2.9% of revenue.
- Capex holds at its 3 year average of 2.8% of revenue.
- Net working capital holds at its 3 year average of -16.1% of revenue.
- Tax is the 25% marginal rate (21% federal plus about 4% state).
- Non-operating assets of $84,118M (MarketableSecuritiesNoncurrent $84,118M): investments outside cash that the cash flows do not value. Check the balance sheet.
- WACC of 10.73% from CAPM: risk-free 5.29%, equity risk premium 4.14%, unlevered beta 1.32 (Computers/Peripherals) relevered to 1.34, cost of debt 6.79% (risk-free plus 1.5pp).
- Weights from market cap of $4,807,323M and filed debt of $82,300M.
Why these choices.Growth starts at Apple's own five year rate and slows evenly to 2.5%, roughly the long run growth of the economy, because no company outgrows the economy forever. The margin and spending ratios are Apple's recent averages, so the model assumes the business keeps working the way it has. Net working capital is negative: Apple collects from customers before it pays suppliers, so growth releases cash instead of tying it up.
The WACC is the return investors demand, and it is the rate the future cash is discounted at. It is built from the Risk-free rate of 5.3% (10 year Treasury, 2026-09-30), plus beta times the Equity risk premium of 4.1%. Apple has little debt against a $4,807,323M market value, so its WACC is almost all cost of equity: 10.7%.
The non-operating assets are Apple's long-term marketable securities, $84,118M at 2026-06-27 (10-Q filed 31 July 2026). The cash flows do not include the income from them, so they are added on top.
3. The result
| PV of forecast cash flows | $576,122M |
|---|---|
| PV of terminal value | $1,223,013M |
| Enterprise value | $1,799,136M |
| Less: total debt | ($82,300M) |
| Plus: cash and equivalents | $62,399M |
| Plus: non-operating assets | $84,118M |
| Equity value | $1,863,353M |
| Diluted shares (millions) | 14,651.6 |
| Value per share | $127.18 |
The forecast cash flows and the Terminal value (the value of every year after the forecast) add up to the enterprise value, the value of the whole business. Take off debt, add cash and investments, and divide by shares: $127.18 a share, against a price of $334.45.
The bear and bull cases move growth and margin 2 points down and up, and terminal growth half a point. They run from $108.95 to $148.48, a spread ValueDesk rates as medium uncertainty, so the Buy-below price asks for a 30% discount: $89.02.
The tool also raises a flag: the final forecast year reinvests nothing, yet the model grows forever at 2.5%. Growth that is not paid for usually means the terminal value is too high, not too low. So the gap to the price is not the model being stingy.
4. What the price implies
A Reverse DCF turns the question around. Instead of asking what Apple is worth, it asks what Apple would have to do to be worth $334.45, holding every other input where it is.
| Driver | Price implies | 5 year average |
|---|---|---|
| Revenue growth, every year | 28.7% | 9.3% |
| EBIT margin, every year | n/a | 30.7% |
To justify the price on this starting point, revenue would have to grow about 28.7% every year for five years, three times its own average of 9.3%. No margin up to 80% gets there on its own. In other words, the market is not paying for a better version of the last five years. It is paying either for much faster growth, or with a much lower discount rate than the 10.7% used here.
5. Comps
The comps tool suggests peers from the SEC: companies with the same industry code, nearest in size. EV/EBITDA compares the value of the whole business to its operating cash profit, and it is tried first because debt and tax do not distort it.
| Company | EV / EBITDA |
|---|---|
| AAPL Apple (subject) | 28.7x |
| DELL Dell Technologies Inc. | 21.2x |
| SMCI Super Micro Computer, Inc. Common Stock | 8.3x |
| OMCL Omnicell Inc | 10.7x |
| ZEPP Zepp Health Corporation American depositary shares, each representing sixteen Class A ordinary sharesEBITDA is zero or negative, so EV/EBITDA is not meaningful. | n/a |
| OSS One Stop Systems, Inc. Common StockEBITDA is zero or negative, so EV/EBITDA is not meaningful. | n/a |
| SCKT Socket Mobile, Inc. NewEBITDA is zero or negative, so EV/EBITDA is not meaningful. | n/a |
Only 3 of the 6 suggested peers have positive EBITDA, so only they count. Their median is 10.7x. Apple trades at 28.7x, a 168% premium. Applying the peers' Quartilemultiples to Apple's own EBITDA gives $109.71 to $184.81 a share.
Read this as a warning about the peer set, not a verdict on Apple. Dell and Super Micro sell servers and PCs on thin margins. Apple sells phones with a services business and a brand on top, and earns 36.0% EBITDA margins. An industry code cannot see that. A better comps set would be chosen by hand from companies that earn like Apple, and the comps tool lets you do that.
6. How the two methods combine
- DCF starting pointDCF starting point, Intrinsic: $108.95 to $148.48
- Comps, EV / EBITDAComps, EV / EBITDA, Relative: $109.71 to $184.81
- 52 week range52 week range, Market: $243.42 to $345.34
The valuation range puts both methods on one chart, with the 52 week trading range for reference. The fair value is the even weight of the DCF base case and the comps median: $125.45. The 52 week range is drawn but not weighted, because where a stock has traded says nothing about what it is worth.
The two methods together run from $108.95 to $184.81. That is wider than the DCF on its own, so uncertainty rises to high and the Margin of safety asked for rises to 40%. The buy-below price is $75.27. At $334.45, Apple sits above fair value.
7. What to take away
Both methods say the same thing, for different reasons. On these inputs Apple's price is far above what its own record supports at a 10.7% discount rate, and far above what ordinary hardware makers sell for.
That does not make Apple a sell. It means a buyer at $334.45 is betting on something the record does not show yet: much faster growth, a lower discount rate (a smaller beta or lower rates), or a business that deserves a premium over every listed peer forever. The reverse DCF tells you the size of that bet.
The useful habit is to change one input at a time and watch the value move. Try a WACC of 8%, or growth of 12% a year, in the DCF and see which story you believe. The tools show the arithmetic so you can disagree with it.