How to Calculate Intrinsic Value (Apple Stock Example)

Today we break down how to calculate the intrinsic value of a stock the way Warren Buffett does it using Apple stock as our example. The discounted present value of future cash (DCF calculation) method is the gold standard for valuation.

This AAPL Stock Analysis was done at the end of September 2020.

In this video, you will learn about: (1) estimating the growth of future earnings, (2) calculating the present value of those future earnings, (3) calculating the present value of those earnings and totaling it up to find the sum of the present value of all the future earnings - in other words, the intrinsic value. Then (4) I show you the IRR formula and how it can be used instead so that you're calculating for the discount rate rather than your annual rate of return rather than the present value.

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TIMESTAMPS
00:00 How Warren Buffett Calculates Intrinsic Value
00:29 Apple stock Example
05:53 Discount Rate and Present Value
08:56 Changing growth estimates
10:24 Net Present Value and the IRR Formula
16:11 The value of a stock re-cap
18:37 Buffett Clip Talking on intrinsic value
20:30 Charlie Munger Talking on using a formula
22:34 Buffett and Munger on how many years to go out



Special thanks to my incredibly beautiful, smart, and creative girlfriend, Stephanie, for her editing wizardry and creative insights and ideas. Although you do not see her speaking to you in the videos, believe me, she has poured her heart and soul into making this video and the videos on this channel. It's been a 50/50 effort. I don't want to even imagine what these videos would look like without her hard work and creative insights. Thank you.

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