Valuation of Apple Inc.

• Autor(a) principal: Yiran, Meng
• Data de Publicação: 2017
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10071/14630
• topic: Finanças; Avaliação; Ação financeira; Valor; Fluxos monetários; Valuation; Discounted Cash Flow; Present Value; Multiples; Avaliação; Fluxos de caixa descontados; Valor atual; Múltiplos

Generally valuation models can be divided into two main categories: Absolute Valuation and Relative Valuation. Under each criterion there is a wide range of models. In order to define the fair value of Apple’s stocks, several models are applied, including FCFF model, FCFE model, DDM, Residual Income Model and Multiples Valuation Model. Key financial indicators show that Apple still maintains a high profit margin in the recent years, while competition in electronics industry is expected to become fiercer in the coming future. In terms of the capital structure, Apple has increased its debts continuously in the recent years, and the growing ROE actually results from the combined effect of high profitability and leverage effect. The majority of valuation models suggest that the shares of Apple are undervalued as the estimated fair price is higher than the current market price. Despite the suspicious comments on the company after the loss of Steve Jobs, the share price of Apple is expected to appreciate and reach the implied fair value in the long run. As different models provide various results, they have different hypothesis and limitations. Though Apple is assumed as a mature company, the payout ratio is relatively low and there is not enough historical data for the prediction of future dividends, which make the result from DDM unreliable. Based on the results generated by valuation models and financial indicators, the recommendation for the customers is to buy or hold shares of Apple. In addition, the author also suggests that the company should consider the increase of dividends when there is a shortage of good investment opportunities.