Risk Analysis: Is Apple Inc. a Value Trap or Safe to Buy?
NMS · Technology · Consumer Electronics
Is Apple Inc. a safe investment right now?
Apple Inc.'s Altman Z-Score of 9.75 places it in the safe zone. Our DCF model estimates intrinsic value at $156.00, suggesting the stock is overvalued by 75%. Moat rating: 3.6/5 stars.
Could Apple Inc. go bankrupt? Altman Z-Score analysis
Z-Score of 9.75 is above 3.0, indicating the company is financially healthy by this metric.
- Below 1.8 — Distress Zone (high bankruptcy risk)
- 1.8 to 3.0 — Gray Zone (elevated uncertainty)
- Above 3.0 — Safe Zone (financially healthy)
What drives AAPL's Z-Score?
| Component | Formula | Value | Weight | Contribution |
|---|---|---|---|---|
| A · Working Capital / Total Assets | WC / TA | -0.0641 | 1.2 | -0.08 |
| B · Retained Earnings / Total Assets | RE / TA | -0.0525 | 1.4 | -0.07 |
| C · EBIT / Total Assets | EBIT / TA | 0.3132 | 3.3 | 1.03 |
| D · Market Cap / Total Liabilities | MCap / TL | 13.0288 | 0.6 | 7.82 |
| E · Revenue / Total Assets | Rev / TA | 1.0502 | 1.0 | 1.05 |
How has AAPL's financial health changed over time?
| Year | Z-Score | Zone |
|---|---|---|
| 2016 | 15.16 | Safe |
| 2017 | 13.7 | Safe |
| 2018 | 10.96 | Safe |
| 2019 | 10.81 | Safe |
| 2020 | 11.58 | Safe |
| 2021 | 10.97 | Safe |
| 2022 | 9.82 | Safe |
| 2023 | 9.95 | Safe |
| 2024 | 10.52 | Safe |
| 2025 | 9.75 | Safe |
Source: Calculated from AAPL's latest 10-K filing on SEC EDGAR.
What is Apple Inc. actually worth?
What assumptions go into this valuation?
| Parameter | Value | Source |
|---|---|---|
| FCF Growth Rate (Stage 1) | 12.7% | 70% analyst consensus + 30% historical |
| Analyst EPS Growth (This Year) | 14.1% | Consensus (40 analysts) |
| Analyst EPS Growth (Next Year) | 10.0% | Consensus |
| Historical 5Y FCF CAGR | 14.0% | SEC EDGAR |
| Terminal Growth Rate | 2.5% | Long-term GDP proxy |
| Discount Rate (WACC) | 10.3% | CAPM (Rf=4.3% + 1.11*5.5%) |
| Net Cash / (Debt) | $-23,602M | Balance sheet |
| Base FCF (TTM) | $106.3B | Trailing 12 months |
| Shares Outstanding | 14,681,140,000 | Latest |
How sensitive is the valuation to growth rate changes?
| Growth Rate | 8% WACC | 10% WACC | 10.3% WACC | 13% WACC |
|---|---|---|---|---|
| 0% | $116.57 | $86.15 | $82.92 | $62.16 |
| 2.5% | $134.95 | $98.97 | $95.16 | $70.69 |
| 5.0% | $156.05 | $113.62 | $109.14 | $80.38 |
| 7.5% | $184.82 | $133.28 | $127.85 | $93.10 |
What does AAPL's free cash flow history look like?
| Year | FCF | Growth |
|---|---|---|
| 2017 | $70.0B | — |
| 2018 | $53.5B | +-23.6% |
| 2019 | $51.8B | +-3.2% |
| 2020 | $64.1B | +23.8% |
| 2021 | $58.9B | +-8.1% |
| 2022 | $73.4B | +24.6% |
| 2023 | $93.0B | +26.7% |
| 2024 | $111.4B | +19.9% |
| 2025 | $99.6B | +-10.6% |
Source: FCF data from SEC EDGAR filings. Price via Yahoo Finance.
Does Apple Inc. have a durable competitive advantage?
Moat rating: 3.6/5.
What makes up AAPL's moat score?
ROIC Stability
ROIC variability over the past decade. Score: 3/5.
Gross Margin Trend
Gross margin trajectory over the past decade. Score: 5/5.
Switching Costs
Estimated customer lock-in based on margin level. Score: 3/5.
How stable is AAPL's return on invested capital?
| Year | ROIC | Trend |
|---|---|---|
| 2016 | 25.0% | — |
| 2017 | 29.3% | Rising |
| 2018 | 21.9% | Declining |
| 2019 | 24.6% | Rising |
| 2020 | 30.4% | Rising |
| 2021 | 29.3% | Declining |
| 2022 | 29.4% | Stable |
| 2023 | 54.8% | Rising |
| 2024 | 57.6% | Rising |
| 2025 | 60.0% | Rising |
Source: ROIC calculated from SEC EDGAR filings.
Is Apple Inc.'s dividend safe?
Can Apple Inc. afford its dividend?
Payout ratio is 13.0%. FCF covers the dividend 24.2x. 24 consecutive years of payments.
Apple Inc.'s key financial metrics
| Metric | Latest | 1Y Ago | 3Y Ago | Trend |
|---|---|---|---|---|
| Revenue | $383.3B | $394.3B | $274.5B | Rising |
| Net Income | $97.0B | $99.8B | $57.4B | Rising |
| Free Cash Flow | $99.6B | $111.4B | $73.4B | Rising |
| Gross Margin | 44.1% | 43.3% | 38.2% | Rising |
Common questions about Apple Inc.
Is Apple Inc. at risk of going bankrupt?
Apple Inc.'s Altman Z-Score of 9.75 places it in the safe zone. This metric uses balance sheet ratios to predict bankruptcy probability within 2 years. A score below 1.8 signals distress, while above 3.0 indicates safety.
What is Apple Inc.'s intrinsic value based on DCF?
Our DCF model estimates Apple Inc.'s intrinsic value at $156.00 per share. The current margin of safety is -75.0%. This estimate is based on historical free cash flow trends and a risk-adjusted discount rate.
Does Apple Inc. have a competitive moat?
Apple Inc. receives a moat rating of 3.6 out of 5 stars, based on ROIC stability, gross margin trends, and estimated switching costs. A rating above 3.5 suggests a durable competitive advantage.
Is Apple Inc.'s dividend safe?
Our dividend safety analysis examines payout ratio, free cash flow coverage, and the company's streak of consecutive dividend payments to determine whether the current payout is sustainable.
Important disclaimer
This is not financial advice. All data is sourced from SEC EDGAR public filings. Always consult a qualified financial advisor before making investment decisions.
Last updated: Apr 20, 2026. Data may not reflect the most recent quarter if SEC filings have not yet been processed.
AAPL analysis methodology: How we calculate fair value, Z-Scores, and moat ratings