“The shares currently trade at a Price to Book of 4.89. This cannot be considered cheap if you are looking at asset based valuation measures,” Kumar writes. “However, as many tech companies, Apple has tremendous Asset leverage – it can create more shareholder value using fewer assets than companies in other industries.”
Kumar writes, “The Price to Earnings ratio is a much more reasonable 14.5. If you discount the excess cash that Apple has sitting on its books (I discounted all of it except $2 B, which I think is a reasonable amount for Apple to have to support its maintenance operational expenses), the P/E ratio falls to 13.36. This is a respectable P/E for a typical manufacturing company, but Apple is not that typical.”
Read more in the full article here.
[Thanks to MacDailyNews Reader "David E." for the heads up.]