How to Calculate Intrinsic Value (Apple Stock Example)

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Watch an updated Apple valuation here!

Download the spreadsheet template below:

Being able to confidently value a stock is essential in value investing. We need to be able to identify those 50 cent dollars and grab that margin of safety as it presents itself!

I hope this video gives you all a good example of Phil Town's 'Margin of Safety' valuation method.

Recommended Investing Books:
Rule One by Phil Town:

Payback Time by Phil Town:

The Intelligent Investor by Ben Graham:

The Dhandho Investor by Mohnish Pabrai:

The Education of a Value Investor by Guy Spier:

Recommended Personal Finance/Entrepreneurship Books:
Rich Dad, Poor Dad by Robert Kiyosaki:

Tools of Titans by Tim Ferriss:

Disclaimer:
I am not a financial adviser. This video is for education and entertainment purposes only. Seek professional help before making any investment decisions.

#stocks #intrinsicvalue #valueinvesting

[InvestingwithTom]

Watch an updated Apple valuation here!

[AlexSanchez-tc]

I appreciate your approach to teaching.. To my understanding this just proves how much we need an edge as investors because playing the market like everyone else just isn’t good enough, we just need to hold onto our hopes and wait to see how things turn out because market movements are almost always unpredictable. In my portfolio, I'm noticing more red than green.

[lailaalfaddil]

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[Gabrielle..]

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[greenquake]

As I would see it, the go to solution for climate this downturn and high expansion is momentary exchanging, rather than long haul exchanging, most people utilizing these methods are netting a lot of gains, sure the dangers are higher yet once more isn't the ongoing business sector similarly as unsafe?.

[tjwonder]

This is why Buffet tells us that you don't have be really smart, just very patient. Very good video! Thank you for creating this in a step-by-step process. Most investors know to buy under value, but it's getting the intrinsic value is part of the critical key in knowing when to buy.

[CutinChai]

Thank you, do you have a video where you discuss different method of calculating and so on.

[allfusionx]

Wow; everyone just talks about valuation but that’s where they stop; you took it all the way. Great job! Thanks for educating me/us

[banksgraves]

Hi, how can I use this method if the company has negative earnings per share but a positive growth rate?

[ankitwadhwa]

This is really amazing, however, can you please tell me how to apply this in case if a company EPS is in negative as. As I am stuck in one of the stock & wanted to exit the position but wanted to do the quick analysis for deriving the future stock value. So that I can decide whether to hold that stock or sell it.

[ilancanas]

Where can we find the P/E Ratio 5-Year High and the P/E Ratio 5-Year Low now? (because the part of the analysis of msn monay has changed)

[bobbymainz]

I like investing in close-end funds that pay monthly dividends. The trick is to hold long term and reinvest the monthly dividends plus buy more shares on a monthly basis or when ever you can afford to. This can be easily done because close-end funds are bought and sold on the stock market just like regular stock. That’d be enough to create a portfolio that would pay you between $50k to $70k in dividend income

[davidroussell]

There's NOTHING MORE IMPORTANT when investing than being able to calculate intrinsic value, knowing if a security is trading at a discount to that value at the moment, and knowing your margin of safety/maximum buy price. Keep in mind, valuation IS AN ART. It's not all science and math. So you have to give yourself some wiggle room, and the price of securities is always subject to buyer sentiment. Good video!

[theandonlycorbin]

Thank you for your breakdown and not requiring people to download a spreadsheet. I wanted the math and you provided it. Thank you, I appreciate you.

[zandervisser]

Hi, I know this is an old video, but how do you approach a company like Disney that has a current EPS (TTM) of -1.59?

[jojostocks]

Hi, I'm new to investing and have a quick question. Why do you multiply the 10 year number by the P/E ratio? Aren't large PE ratios and indicator of an overvalued company?

[christiankhoury]

How do you calculate the intrinsic value if the EPS ttm is negative?

[ricecube]

Amazing ! Simply not overly complicated and easy to understand, no courses being offered just straight value, ,,,u sir are the hero we all need in this get rich quick market !

[goldenfinancialservices]

I used this formula to calculate buying Amazon today with a 50% margin of safety, and the result says if you can buy Amazon for less than $2, 819.15 you'd be getting it a huge discount. I used the same numbers you used, the margin of safety 50% and minimum rate of return 15%. For the growth rate I put 34 and for the P/E ratio, I put double the growth rate which is 68. You'd think Amazon, as expensive as it is that it's overpriced, but according to this calculation even at $2, 401 that it's at today, it's actually undervalued!

[DrBradyHurst]

Thank you for your help! I just did a valuation of Apple using this method today (5-24-22) and got to a margin of safety price of $36. The last time it was at that price was December 2018. Buffet, with his analysis, saw a buy at $150/share. Even if we didn't use a margin of safety, the current value price would be $73. It may take years (if ever) for Apple to get back to that price. And if it did, it would seem that Apple would be in some serious trouble. If investing for the long term, when can you say, "that price is good ENOUGH"?