Valuation

Company: Apple, Inc. $190.29 Current Price

Ticker: AAPL $213.75 Intrinsic Value
Date: 7/31/2018 0.89 Price/Value
13.0% Est. 5 Year Rate of Return

Dollar figures in thousands except per share amounts

Data from 2017 10K and 7/31/2018 Q3 8K

Share Information
$190.29 Current Price (per share)
5,068,493 Diluted Shares Outstanding
1.53% Dividend Yield

Revenue
$255,274,000 Revenue ttm

4.50% Revenue Growth Year 1 3.7% assumed 10 year CAGR

4.50% Revenue Growth Year 2 4.5% assumed 5 year CAGR
4.50% Revenue Growth Year 3 mrq growth was 17%
4.50% Revenue Growth Year 4
4.50% Revenue Growth Year 5
3.00% Revenue Growth Year 6 M* is predicting mid single digit revenue for Apple long term
3.00% Revenue Growth Year 7 Valuentum predicting 5.9% sales growth over the next five years
3.00% Revenue Growth Year 8
3.00% Revenue Growth Year 9
3.00% Revenue Growth Year 10
3.00% Revenue Growth after Year 10

Operating Margin
26.00% Operating Margin Year 1 mrq op. margin was 23.7%
26.00% Operating Margin Year 2
26.00% Operating Margin Year 3 M* expects margins to fall to 24% range in the long run
25.00% Operating Margin Year 4 as AAPL trades margins for growth and as competition grows
25.00% Operating Margin Year 5
25.00% Operating Margin Year 6 Valuentum estimating 28% margins over the next five years
25.00% Operating Margin Year 7
25.00% Operating Margin Year 8
25.00% Operating Margin Year 9 Q1 margin is always high due to the boost from holiday sales
25.00% Operating Margin Year 10
25.00% Operating Margin after Year 10
Interest Paid, EBITDA
$2,712,000 Interest Paid ttm
$78,767,884 EBITDA ttm

Tax Rate
15.00% Tax Rate Year 1 tax rate for next quarter estimated at 14.5%
15.00% Tax Rate Year 2
15.00% Tax Rate Year 3
15.00% Tax Rate Year 4
15.00% Tax Rate Year 5
15.00% Tax Rate Year 6
15.00% Tax Rate Year 7
15.00% Tax Rate Year 8
15.00% Tax Rate Year 9
15.00% Tax Rate Year 10
15.00% Tax Rate after Year 10

Depreciation
4.7% Depreciation and Amortization as % of Revenue Year 1 d&a is going up with more clou
4.7% Depreciation and Amortization as % of Revenue Year 2
4.7% Depreciation and Amortization as % of Revenue Year 3
4.7% Depreciation and Amortization as % of Revenue Year 4
4.7% Depreciation and Amortization as % of Revenue Year 5
4.0% Depreciation and Amortization as % of Revenue Year 6
4.0% Depreciation and Amortization as % of Revenue Year 7
4.0% Depreciation and Amortization as % of Revenue Year 8
4.0% Depreciation and Amortization as % of Revenue Year 9
4.0% Depreciation and Amortization as % of Revenue Year 10
4.0% Depreciation and Amortization as % of Revenue after Year 10

Capex
6.0% Capex as % of Revenue Year 1
6.0% Capex as % of Revenue Year 2
6.0% Capex as % of Revenue Year 3
6.0% Capex as % of Revenue Year 4
6.0% Capex as % of Revenue Year 5
4.5% Capex as % of Revenue Year 6
4.5% Capex as % of Revenue Year 7
4.5% Capex as % of Revenue Year 8
4.5% Capex as % of Revenue Year 9
4.5% Capex as % of Revenue Year 10
4.5% Capex as % of Revenue after Year 10
Stock-Based Compensation
1.7% SBC Expense as % of Revenue Year 1
1.7% SBC Expense as % of Revenue Year 2
1.7% SBC Expense as % of Revenue Year 3
1.7% SBC Expense as % of Revenue Year 4
1.7% SBC Expense as % of Revenue Year 5
1.7% SBC Expense as % of Revenue Year 6
1.7% SBC Expense as % of Revenue Year 7
1.7% SBC Expense as % of Revenue Year 8
1.7% SBC Expense as % of Revenue Year 9
1.7% SBC Expense as % of Revenue Year 10
1.7% SBC Expense as % of Revenue after Year 10

Working Capital
8.0% Working Capital as % of Revenue Year 1 probably will trend down over time with increase
8.0% Working Capital as % of Revenue Year 2
8.0% Working Capital as % of Revenue Year 3
8.0% Working Capital as % of Revenue Year 4
8.0% Working Capital as % of Revenue Year 5
8.0% Working Capital as % of Revenue Year 6
8.0% Working Capital as % of Revenue Year 7
8.0% Working Capital as % of Revenue Year 8
8.0% Working Capital as % of Revenue Year 9
8.0% Working Capital as % of Revenue Year 10
8.0% Working Capital as % of Revenue after Year 10

Balance Sheet
$243,743,000 Cash and Equivalents
$349,197,000 Total Assets
$17,472,000 Short Term Debt
$97,128,000 Long Term Debt
$114,949,000 Book Value of Equity

Discount Rate
9.50% Discount Rate Valuentum using 9.8% discount rate

Cash Flows
Year 0 1 2 3
Revenue $255,274,000 $266,761,330 $278,765,590 $291,310,041
EBIT $69,357,946 $72,479,053 $75,740,611
NOPAT $58,954,254 $61,607,195 $64,379,519
Depreciation and Amortization $12,537,783 $13,101,983 $13,691,572
Capex $16,005,680 $16,725,935 $17,478,602
Growth in Working Capital $918,986 $960,341 $1,003,556
Stock Based Comp. Expense $4,534,943 $4,739,015 $4,952,271
FCFF $59,102,313 $61,761,917 $64,541,203
Discounted FCFF $53,974,715 $51,510,116 $49,158,056

Value of Firm
$430,338,420 Discounted FCFF 1-10
$523,892,355 Discounted FCFF Terminal
$954,230,775 Value of Operating Assets
$243,743,000 Value of Non-Operating Assets
$1,197,973,775 Value of Firm

Value of Equity
$114,600,000 Value of Debt
$1,083,373,775 Value of Equity

Value Per Share

$213.75 Value per Share
0.89 Price/Value Ratio

Estimated Return
$336.49 Estimated Share Price 5 Years Out Intrinsic value estimate compounded forward fiv
$14.56 Estimated Dividends Collected Over 5 Years Estimated dividends collected, assuming no divi
13.0% Estimated 5 Year Rate of Return Annualized 5 year rate of return of assuming futu
 Return Metrics Balance Sheet Safety
17.32% 5 Year Average ROA 25.04 Interest Coverage Ratio
insic Value 36.85% 5 Year Average ROE 1.45 Debt/EBITDA Ratio
25.08% 5 Year Average ROIC 32.82% Debt/Assets Ratio
. 5 Year Rate of Return 1.5% Dividend Yield
5.6% Free Cash Flow Yield
Other valuations:
M* $200
TMF Pro $166
Valuentum $220

(millions)
year 2013 2014
revenue 170910 182795
growth: 6.95%
4 year growth rate 7.62%
3 year growth rate 7.76%
2 year growth rate 1.09%
ue for Apple long term
wth over the next five years

year 2013 2014

operating margin 28.70% 28.70%
ge in the long run 5 year average: 28.50%
nd as competition grows 4 year average: 28.45%
3 year average: 28.36%
ver the next five years

oost from holiday sales

 year 2013 2014
tax rate 26.15% 26.13%
5 year average: 25.76%
4 year average: 25.67%
3 year average: 25.51%

is going up with more cloud service infrastructure purchases (millions)

year 2013 2014
depreciation 6757 7946
other non-cash ex 0 0
revenue 170910 182795
total non-cash ex 6757 7946
(depreciation+etc) 3.95% 4.35%
5 year average: 4.52%
4 year average: 4.67%
3 year average: 4.77%

(millions)
year 2013 2014
capex 8165 9571
acquisitions 1407 4007
sales/divestitures 0 0
revenue 170910 182795
net capex 9572 13578
net capex/rev 5.60% 7.43%
5 year average: 5.98%
4 year average: 6.08%
3 year average: 5.63%
 (millions)
year 2013 2014
sbc 2253 2863
revenue 170910 182795
sbc/rev 1.32% 1.57%
5 year average: 1.71%
4 year average: 1.81%
3 year average: 1.89%

own over time with increased dividend payouts (millions)

year 2013 2014
current assets 73286 68531
current liabilities 43658 63448
working capital 29628 5083
revenue 170910 182795
working capital/re 17.34% 2.78%
5 year average: 9.82%
4 year average: 7.94%
3 year average: 9.66%

% discount rate year 2013 2014

ROA 19.34% 18.01%
ROE 30.64% 33.61%
ROIC 26.08% 26.20%
5 year avg ROA: 17.32%
5 year avg ROE: 36.85%
5 year avg ROIC: 25.08%

4 5 6 7 8 9
$304,418,993 $318,117,848 $327,661,383 $337,491,225 $347,615,962 $358,044,440
 $76,104,748 $79,529,462 $81,915,346 $84,372,806 $86,903,990 $89,511,110
$64,689,036 $67,600,043 $69,628,044 $71,716,885 $73,868,392 $76,084,444
$14,307,693 $14,951,539 $13,106,455 $13,499,649 $13,904,638 $14,321,778
$18,265,140 $19,087,071 $14,744,762 $15,187,105 $15,642,718 $16,112,000
$1,048,716 $1,095,908 $763,483 $786,387 $809,979 $834,278
$5,175,123 $5,408,003 $5,570,244 $5,737,351 $5,909,471 $6,086,755
$64,857,996 $67,776,606 $72,796,498 $74,980,393 $77,229,804 $79,546,699
$45,113,555 $43,053,575 $42,230,456 $39,723,625 $37,365,602 $35,147,552

te compounded forward five years by the discount rate

collected, assuming no dividend raises
te of return of assuming future share price and dividends collected five years out matches my estimate
erest Coverage Ratio
bt/EBITDA Ratio
bt/Assets Ratio

2015 2016 2017 ttm

224337 215639 229234 255274
22.73% -3.88% 6.30%

2015 2016 2017 ttm

30.48% 27.80% 26.80% 26.60%
 2015 2016 2017 ttm
26.37% 25.56% 24.60% 24.60%

2015 2016 2017 ttm

11257 10505 10157 10865
0 0 0 0
224337 215639 229234 255274
11257 10505 10157 10865
5.02% 4.87% 4.43% 4.26%

2015 2016 2017 ttm

11247 12734 12451 13696
584 297 329 431
0 0 0 0
224337 215639 229234 255274
11831 13031 12780 14127
5.27% 6.04% 5.58% 5.53%
 2015 2016 2017 ttm
3586 4210 4840 5327
224337 215639 229234 255274
1.60% 1.95% 2.11% 2.09%

2015 2016 2017 latest Qtr

89378 106869 128645 115761
80610 79006 100814 88548
8768 27863 27831 27213
224337 215639 229234 255274
3.91% 12.92% 12.14% 10.66%

2015 2016 2017 ttm

20.45% 14.93% 13.87% 15.19%
46.25% 36.90% 36.87% 40.86%
31.32% 21.95% 19.86% 21.23%

10 11
$368,785,774 $379,849,347
$92,196,443 $94,962,337
$78,366,977 $80,717,986
$14,751,431 $15,193,974
$16,595,360 $17,093,221
$859,307 $885,086
$6,269,358 $6,457,439
$81,933,100 $84,391,093
$33,061,168 ###
Terminal
Accounts Receivable
(millions)
year 2013 2014 2015 2016 2017 latest Qtr
accts. rec. 13102 17460 16849 15754 17874 14104
revenue 170910 182795 224337 215639 229234 255274
accts. rec./rev 7.67% 9.55% 7.51% 7.31% 7.80% 5.53%
5 year average: 7.97%
4 year average: 8.04%
3 year average: 7.54%

Inventory
(millions)
year 2013 2014 2015 2016 2017 latest Qtr
inventory 1764 2111 2349 2132 4855 5936
revenue 170910 182795 224337 215639 229234 255274
inventory/rev 1.03% 1.15% 1.05% 0.99% 2.12% 2.33%
5 year average: 1.27%
4 year average: 1.33%
3 year average: 1.27%

Accounts Payable
(millions)
year 2013 2014 2015 2016 2017 latest Qtr
accts. payable 22367 30196 35490 37294 49049 38489
revenue 170910 182795 224337 215639 229234 255274
accts. payable/rev 13.09% 16.52% 15.82% 17.29% 21.40% 15.08%
5 year average: 16.82%
4 year average: 16.82%
3 year average: 16.82%
percent revenue Accounts Receivable/Revenue

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
1 2 3 4 5 6
Year
percent revenue

Inventory/Revenue

2.50%

2.00%

1.50%

1.00%

0.50%

0.00%
1 2 3 4 5 6

Year
percent revenue

Accounts Payable/Revenue

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
1 2 3 4 5 6

Year