Apple (AAPL) designs, manufactures and markets a range of personal computers, mobile communication and media devices, and portable digital music players, and sells a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications. Products and services include Macintosh (“Mac”) computers, iPhone, iPad, iPod, Apple TV, Xserve, a portfolio of consumer and professional software
applications, the Mac OS X and iOS operating systems, third-party digital content and applications through the iTunes Store, and a variety of accessory, service and support offerings.
Here is one fair value view based on management’s financial track record. I’m not going to get into how wonderful Apple products are, or the genius of Steve Jobs, but instead focus on the financials as they relate to fair value, and then look at possible risks.
Fair values are based, in part, on the following: discounted cash flow, a modified Graham’s intrinsic value formula and a P/E analysis. The valuation model consists of two parts.
- The discounted cash flow and the modified Graham’s intrinsic value are blended to arrive at a fair value.
- A P/E analysis based on historical adjusted values.
Fair value used is the minimum value of the two parts.
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