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

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

= (Stock Price) * (Shares)

= 2015-05-29's price of ($131) * (5,795,343,000 shares) = $759bil market cap

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

= 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)

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.

The Percent of Debt is = [(Current Long Term Debt) + (Long Term Debt)] / [(Current Market Cap) + (Current Long Term Debt) + (Long Term Debt)]

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:

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

= Price of ($73) * (5,795,343,000 shares) = $423bil market cap

= Price of ($30) * (5,795,343,000 shares) = $178bil market cap

Price is the marketcap/shares, while Earnings is the net-income/share.

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