FAQs
Over the past twelve months the share price is up 1.19%. Based on the DCF valuation, the stock is overvalued. The DCF value of $112.24 per share is lower than the current market price of $167.20.
How do you know if a stock is undervalued DCF? ›
For a reverse-engineered DCF, if the current price assumes more cash flows than what the company can realistically produce, the stock is overvalued. If the opposite is the case, the stock is undervalued.
What is the DCF valuation of AAPL? ›
The DCF Value of AAPL stock (98.52 USD) is 40% less than its price (165 USD). The Relative Value of AAPL stock (164.26 USD) is 0% less than its price (165 USD).
What is the fair value of Apple stock? ›
As of 2024-04-27, the Fair Value of Apple Inc (AAPL) is 83.95 USD. This value is based on the Peter Lynch's Fair Value formula. With the current market price of 169.3 USD, the upside of Apple Inc is -50.4%.
What is a DCF valuation of a stock? ›
Discounted cash flow (DCF) is a method of valuation used to determine the value of an investment based on its return in the future–called future cash flows. DCF helps to calculate how much an investment is worth today based on the return in the future.
How to find if a stock is undervalued or overvalued? ›
Price-earnings ratio (P/E)
A high P/E ratio could mean the stocks are overvalued. Therefore, it could be useful to compare competitor companies' P/E ratios to find out if the stocks you're looking to trade are overvalued. P/E ratio is calculated by dividing the market value per share by the earnings per share (EPS).
Which stocks are currently undervalued? ›
Undervalued stocks
| S.No. | Name | P/E |
|---|
| 1. | Cons. Finvest | 2.50 |
| 2. | West Coast Paper | 4.85 |
| 3. | Andhra Paper | 4.49 |
| 4. | Shreyans Inds. | 3.58 |
7 more rowsDCF Valuation is extremely sensitive to assumptions related to perpetual growth rate and discount rate. Any minor tweaking here and there, and the DCF Valuation will fluctuate wildly and the fair value so generated won't be accurate. It works best only when there is a high degree of confidence about future cash flows.
How reliable is DCF valuation? ›
There are a number of inherent problems with earnings and cash flow forecasting that can generate problems with DCF analysis. 4 The most prevalent is that the uncertainty with cash flow projection increases for each year in the forecast—and DCF models often use five or even 10 years' worth of estimates.
Is DCF valuation good? ›
Despite the advantages of the DCF analysis, it is also exposed to some disadvantages. The main drawback of DCF analysis is that it's easily prone to errors, bad assumptions, and overconfidence in knowing what a company is actually “worth”.
After Apple's recent earnings report, 43 analysts projected the company's 2024 revenue to come in at $388.3 billion, similar to the previous 12 months. Predicted earnings per share stood at $6.55, also consistent with last year's results.
What was the cheapest Apple stock ever? ›
The lowest closing price for Apple (AAPL) all-time was $0.04, on July 8, 1982. The latest price is $169.29.
What is the 3 year return of Apple? ›
Apple Total Shareholder Return (TSR): 25.3% in 2023 and 15.3% 3-yr returns (above peer average) | Trefis.
Does DCF give equity value? ›
A DCF analysis yields the overall value of a business (i.e. enterprise value), including both debt and equity.
Does DCF give you enterprise value? ›
Levered DCF: The levered DCF approach calculates the equity value directly, unlike the unlevered DCF, which arrives at the enterprise value (and requires adjustments thereafter to arrive at equity value). Unlevered DCF: The unlevered DCF discounts the unlevered FCFs to arrive at the enterprise value (TEV).
Is DCF a relative valuation? ›
In discounted cash flow valuation, the objective is to find the value of an asset, given its cash flow, growth and risk characteristics. In relative valuation, the objective is to value an asset, based upon how similar assets are currently priced by the market.
How do you Analyse DCF valuation? ›
The following steps are required to arrive at a DCF valuation:
- Project unlevered FCFs (UFCFs)
- Choose a discount rate.
- Calculate the TV.
- Calculate the enterprise value (EV) by discounting the projected UFCFs and TV to net present value.
- Calculate the equity value by subtracting net debt from EV.
- Review the results.
We do not use a DCF if the company has unstable or unpredictable cash flows (tech or bio-tech start-up) or when debt and working capital serve a fundamentally different role.
Why would you not use a DCF in a valuation? ›
The main Cons of a DCF model are:
Prone to overcomplexity. Very sensitive to changes in assumptions. A high level of detail may result in overconfidence. Looks at company valuation in isolation.
What should be included in DCF valuation? ›
Discounted cash flow (DCF) evaluates investment by discounting the estimated future cash flows. A project or investment is profitable if its DCF is higher than the initial cost. Future cash flows, the terminal value, and the discount rate should be reasonably estimated to conduct a DCF analysis.
