Kwokbot's True Value Stock Analysis/Valuation

TICKER SYMBOL:
company stats:
COMPANY: Apple Inc (AAPL)
On 2015-05-29's the market's price is: $131
With historical 20.0% revenue growth, it should be priced: $113
With 3% growth per year, it should actually be priced: $73
If the company deteriorates 15% every year, it should be priced: $30

Column 5
Market Cap
$759bil
Column 6
Under or Over-valued? (Historic Growth Rate)
15.0%
Column 7
Estimated Market Cap Valuation
$660bil
Column 8
Revenue Growth Rate
20.0%
Column 9
Percent Debt
4.0%
Column 10
Discount Rate
17.0%
Column 11
Under or Over-valued? (3% Growth Rate)
79.0%
Column 12
Capital Exp / Deprecation Ratio
1.2
Column 13
Market Cap Projection (3% Growth Rate)
$423bil
Column 14
Market Cap Projection w/ Negative Growth
$178bil
Column 15
Price to Earnings Ratio (Rounded)
16
Column 16
Earning per Share (Rounded)
9

Apple Inc's Current Market Capitalization

This is how much the entire company is worth to equity share holders
= (Stock Price) * (Shares)
= 2015-05-29's price of ($131) * (5,795,343,000 shares) = $759bil market cap

How much is Apple Inc over or under-valued?

A negative number means it is UNDER-VALUED, and perhaps the company is worth more than the market really believes.
A positive number means it is OVER-VALUED, and the market believes the company is worth more than it's current cash flow.
Financials are from 3 years ending 2014-09-27

Apple Inc's Estimated Market Cap Valuation

This is Kwokbot's estimated Market Capitalization (or worth of the company) based on the Apple Inc's historical CASH FLOWs.
= Price of $113 * 5,795,343,000 shares = $660bil

By adding (1) discounting the PREDICTED CASH FLOW over the next 5 years and (2) the Terminal Value, we are able to get a financially based "fundamental" analysis.
    Assumptions include
  • Cash flows are calculated from full-year financials with latest year: 2014-09-27
  • Over same time period, freezes the average Margins and Ratios (COGS as a % of Revenue, Operating Exp as a % of Revenue, etc), and carries it forward
  • The Historical Revenue Growth (Column 8) is the basis for how the company will continue to grow. We use historical growth for next year, and reduce the growth rate by 20% going forward each year, for the next 4 years. (-) growth is increased by 30percent every year to be more conservative
  • Terminal Value is calculated with a 2% growth rate to perpetuity (aka the cash to infinity, and beyond)

Apple Inc's Average Revenue Growth

This is the average historical revenue growth over the last 3 years, ending 2014-09-27
All else equal, there is a fair probability a company can sustain a similar level of revenue growth into the future.
This Average Revenue Growth over the last 3 years is applied for 5 years of financial projection. The Tiered growth prediction uses growth that is reduced by 20% every year.

Apple Inc's Percent of Debt

Kwokbot assumes the percent of the company's debt will remain the same in the future. The amount of debt is imporant because it gives a reasonable estimate how much debt payment (interest and amortization payments) will be necessary. Discounted Cash Flow analysis can also utilize the % of debt to impact payments for working capital payments and capital expenditures.
The Percent of Debt is = [(Current Long Term Debt) + (Long Term Debt)] / [(Current Market Cap) + (Current Long Term Debt) + (Long Term Debt)]

Apple Inc's Discount Rate

Money NEXT YEAR is not worth the same as it is worth TODAY.
Thus, all future cash flow should be discounted by a rate. It's higher if the company is riskier, or has shown more volatility.
Assumptions:
  • risk_free = .05
  • risk_premium = .09
  • beta*(1+(1-tax_rate)*(perc_debt))
  • tax_rate = .36
  • Under a Stable 3% growth rate, how much UNDER or OVER-valued is Apple Inc?

    Using the same logic as "Estimated Market Cap Valuation" (Column 7), but instead of using the company's growth rate over the last 3 years, Kwokbot applies a conservative 3% growth rate in financials. This is barely above inflation, for goodness sakes.

    Apple Inc's Capital Expenditures / Depreciation Ratio

    Capital Expenditures: How much $$ the company is pumping into infrastructure like PLANTS, PROPERTY, and EQUIPMENT. (AKA, this is all long term stuff that should help the business grow)
    Depreciation: Since all PLANTS, PROPERTY, and EQUIPMENT are so expensive to buy, the actual expense on the company's financial sheets can be spread accross a number of years (for example, a $2,700 Factory can be expensed for $1,000/year for 27 years).
    This RATIO thus shows how much $ the company is pumping into itself. If it is ABOVE ONE, the company is spending more money to grow. If it is BELOW ONE, then maybe it's a little more mature

    Kwokbot's Market Capitalization Prediction of Apple Inc (Stable 3% Growth)

    Using the same logic as "Estimated Market Cap Valuation" (Column 7), but instead of using the company's growth rate over the last 3 years, Kwokbot applies a conservative 3% growth rate in financials. This is barely above inflation, for goodness sakes.
    = Price of ($73) * (5,795,343,000 shares) = $423bil market cap

    Kwokbot's Market Capitalization Prediction of Apple Inc (Negative -15% Errosion)

    Using the same logic as "Estimated Market Cap Valuation" (Column 7), but instead of using the company's growth rate over the last 3 years, Kwokbot applies a NEGATIVE -15% growth rate in financials. If the junk really hits the fan and the cash flow errodes, how much is this company worth?
    = Price of ($30) * (5,795,343,000 shares) = $178bil market cap

    Apple Inc's Price to Earnings Ratio (P/E)

    The higher this is, the more the market thinks the company is worth compared to how much $$ the company brings in.
    Price is the marketcap/shares, while Earnings is the net-income/share.

    Apple Inc's Earnings per Share (EPS)

    How much money does the company bring in per share.


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