Apple's growth and margins, live
AAPL — Revenue Growth, Operating Margin, Net Margin. Open AAPL on the Ledge to see current values.
The free cash flow build-up formula (taxes are levied on EBIT, after D&A)
Unlevered FCF = EBITDA − Taxes on EBIT − CapEx − Δ Working Capital
Bull, base, and bear projection scenarios
| Scenario | Revenue Growth | EBITDA Margin | Use When |
|---|---|---|---|
| Bull case | Management’s optimistic targets | Peak historical margins | Everything goes right |
| Base case | Analyst consensus | Average recent margins | Most likely outcome |
| Bear case | Recession/competitive pressure | Trough margins | Stress test |
Why to project a range, not a single number
Always project 3–5 scenarios, not one. A single-point DCF is a guess dressed up as math. The range between your bear and bull cases tells you how much uncertainty exists in the valuation.
Project next year's FCF from real margins
Pull up a company in Fundamentals. Find its EBITDA margin and CapEx as % of revenue for the last 3 years. Use these as inputs to project next year’s FCF.
What a wide gap between cases tells you
Your base case projects $150M FCF but your bull case projects $250M. What does this 67% gap tell you?
Why margins revert toward the industry average
When forecasting above your own history is fair
You're projecting free cash flow for a company. Historically they've grown revenue 8%/yr for 5 years and maintained 20% FCF margins. You project 10%/yr growth and 25% margins for the next 5 years. Is your forecast defensible?
Check your understanding
Sit with the ideas.
A company has $1B revenue growing at 10%/year, a 25% EBITDA margin, D&A of 5% of revenue, a 21% tax rate, and capex of 5% of revenue (no working-capital change). What is Year 1 projected unlevered FCF (rounded)?
Why:
Try this in paper trading
DCF a stock — buy with margin of safety
Run a back-of-envelope DCF on a stock you've researched. Estimate fair value. Paper-buy ONLY if the current market price is at least 25% below your fair-value estimate. If it isn't, write down why you waited.
Open paper portfolio →Practice mode — simulated trades, not investment advice.