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Apple Valuation

AAPL
3/9/2016 Current share price: $101.12

Apple produces iPhones, iPads, Mac computers, and iPods.  Apple also provides software including iOS and OS X operating systems.  Apple operates the iCloud, which is a cloud based storage and computing service. 

Valuation 
Analyst
The Analyst Target can be used to provide grounding of other valuation techniques.  Targets are often updated too late to be useful, but are usually not completely out to lunch.  The analyst target is 34% above the current price.  This suggests significant mis-pricing of the security.  




Graham Value
Aapl shares are valued using 4 variations of Graham valuation that use different time tables for calculating EPS and EPS growth.  All four valuations show the current shares to be less then half of the value.  These numbers reflect the unbelievable growth rate that aapl has had in recent history.  Leverage has remained insubstantial over this time.  The corrections needed to make Graham valuations realistic are to predict what growth rates will fall to.



Relative Value
For stocks with a long relatively stable history they can be valued against multiples that traded at in the past.  Based on historic multiples AAPL is trading at a discount to its value. Key ratios range from 10% to 88% undervalued.



Intrinsic Value
Intrinsic valuations include discounted cash flow (DCF), dividend discount Model (DDM), and Earnings Power 
Value (EPV).  The DCF Model Values the AAPL at $147.67, suggesting it is largely undervalued.  EPV values AAPL at $104.90 implying a small margin of safety at the current share price.  The dividend growth model values the AAPL at $82.83, which says that Apple should not be bought solely for its dividend at the current price. 




Technical Indicators

Simple Moving Average
The current share price is above the 13 day Moving Average and the moving average is rising. These are both bullish signs. 
MACD
The MACD provides 2 bullish indicators.  It is above the 9-day moving average and the value is above 0.
On Balance Volume
The slope is positive, which is a bullish trend.

Conclusion
Apple is currently well below its value based on most simple models.  The agreement between the models and the Analyst valuation confirms that upside potential does exist.  The concern with Apple is predicting at what rate the growth will slow.  This stock passes the initial screening process and is a good candidate for in depth research to determine if it is buy worthy.

Technical indicators show that since hitting its 52 week low the stock has been in a bullish trend  The stock could be traded based upon current bullish moment and an intrinsic value above the current share price.  

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

This website expresses my own opinion.   I am not a financial advisor.  All opinions, research, analyses, and other information provided on this website are provided as general market commentary and do not constitute investment advice.


This post first appeared on Simple Stock Valuation, please read the originial post: here

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Apple Valuation

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