Hi all,
Looking for a few pointers here. I tried to calculate Apples (aapl) intrinsic value using Benjamin Graham’s formula.
IV = EPS x (8.5 +2g) x 4.4 / Y
IV = Intrinsic Value
EPS = Diluted Earnings Per Share
8.5 = Fair Price to Earnings Ratio for No Growth Company
(This implies a 11.76% earnings yield)
G = Conservatively estimated growth in EPS for the next 7 to 10 years
4.4 = The average yield for high grade corporate bonds in 1962 when the model was introduced
Y = The Current Yield on AAA Rated Corporate Bonds
The IV I came up with is $2160.70
Using these figures: #
EPS 44.11 2012 estimate with one quarter to go. Source CNBC
8.5 the standard as above.
G being 16.3, I came up with this figure by
averaging the the EPS growth from 2006 to 2012 then dividing by 4 then * by 2 as the formula asks.
The 4.4 I changed to 2.92.
Y being 2.45 the yield for Mobil Corporation bonds 7 to 10 year maturity.
Now my questions are:
Do I have this worked out correctly?
If so doesn't the figure in red seem rather crazy and ridiculous?
Or is it completely achievable and if so how?
Looking for a few pointers here. I tried to calculate Apples (aapl) intrinsic value using Benjamin Graham’s formula.
IV = EPS x (8.5 +2g) x 4.4 / Y
IV = Intrinsic Value
EPS = Diluted Earnings Per Share
8.5 = Fair Price to Earnings Ratio for No Growth Company
(This implies a 11.76% earnings yield)
G = Conservatively estimated growth in EPS for the next 7 to 10 years
4.4 = The average yield for high grade corporate bonds in 1962 when the model was introduced
Y = The Current Yield on AAA Rated Corporate Bonds
The IV I came up with is $2160.70
Using these figures: #
EPS 44.11 2012 estimate with one quarter to go. Source CNBC
8.5 the standard as above.
G being 16.3, I came up with this figure by
averaging the the EPS growth from 2006 to 2012 then dividing by 4 then * by 2 as the formula asks.
The 4.4 I changed to 2.92.
Y being 2.45 the yield for Mobil Corporation bonds 7 to 10 year maturity.
Now my questions are:
Do I have this worked out correctly?
If so doesn't the figure in red seem rather crazy and ridiculous?
Or is it completely achievable and if so how?
