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NameNarrativeExpected revenue growth rateTarget operating marginReinvestment assumption (Sales to Capital)Cost of capitalValue per sharePrice per share
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Aswath DamodaranDeclining revenue growth & tighter margins in smartphone and tablet businesses. No new breakthrough products in near future.5%25%2.6613$616.58$505.96
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Higher expected revenue growth rate (6%) as innovation is still Apple main goal. Lower reinvestment assumption according to indusrty averages. FD share count using TSM. Cost of capital of 10% after year 10. Updated effective tax rate to 26.9% and higher distress proceeds reflecting the nature of Apple's business 6%25%212.14%$520.65$505.96
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Declining revenue growth and tighter margins that mimic their individual business lines. Looking at the 10k, broke down the businesses into Computers/Peripherals, Software, Electronics, and Telephone equipment. Then, found a new bottom up beta and WACC. Then, found a weighted average industry OM, which gave the following results.5%7.33%2.6611.72%$366.82$505.96
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Besides the changes listed, also set the terminal revenue growth as 1%, instead of 3%. Target operating margin is lowered because of more severe competition and less cool products launched (and probably it would continue to be so in the future), as along with the lower sales to capital ratio.5%15%212.14%$465.82$505.96
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As a benchmark, here's the output assuming that Apple performance will be in line with the US Industry averages,4%17%2.6612.14%$486.65$505.96
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Revenue growth to stay strong with expansion in emerging market and a lower price point for smartphones. Margin erosion as the space becomes more commoditized. 7%15%2.6611.84%485.49467.71
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Declining revenue growth & tighter margins in smartphone and tablet businesses. Higher cost of capital in terminal year due to risk of industry - rapid changes, increasing competition5%20%2.6611.44%$482.91$468.30
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Increasing global competition will put pressure on revenue growth and margins.5%10%2.669.54%$392.44$464.9
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Operating margins decline but are still above industry wide margins, due to brand loyalty. Revenue growth also declines and is in-line with nominal GDP growth.3%20%29.9%542.2490.64
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No growth for Mac Unit. Hard declining growth for iPhone, slower decline for iPad growth. Tax rate to 25%.6%30%2.6611.99%$706.13$483.41
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