What Is The Fair Value For Apple In The Newtonian World?
by Bio Vantage
The recent drop of Apple (AAPL) stock to $450 has left many investors scratching their heads: is AAPL's price still too expensive at this level? Or is it a great value and a screaming buy? Warren Buffett said that price is what you pay and value is what you get. We may never know exactly the market's sentiment on a particular stock at any given moment, but at least we can estimate the fair value of a stock based on its fundamentals. So we go back to the basics and ask ourselves: what is the fair value for AAPL? Only then can we make a rational investment decision on the stock. Our analysis suggests that AAPL at $450 is a significant discount from its fair value, even under conservative estimates of slow revenue growth and contractions of profit margins. Our analysis of the stock using the Free Cash Flow (FCF) valuation model to derive AAPL's fair values under different scenarios is below. read more »
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