Apple stock is severely undervalued

If you had a company that has these characteristics of valuation:

• 3.42 times its FY2011 revenues
• 14.45 times FY 2011 earnings-per-share
• 4.5 times its cash at the end of FY2011
• 12 times FY2011 free cash flow generated
• No debts on the balance sheet
• 83% year over year EPS growth
• 66% year over year revenue growth
• 40% gross margin on average
• Forecast 38% YOY revenue growth and 44% YOY earning growth for the Q1 FY 2012

“Would it sound like a buy? I guess it does!” Gregory Pepin writes for SeekingAlpha. “By the way, this company is no other than Apple (AAPL).”

Pepin writes, “Using simple fundamental metrics, Apple is severely undervalued despite its big market cap.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Double07” for the heads up.]

26 Comments

  1. Don’t worry… the valuation will change in a massive slaughter of the short sellers over the next quarter.

    AAPL will realize the remaining GAAP cash to the bottom line at then end of this quarter (everyone has forgotten about the accounting rule change and that this coming quarter is the last quarter of the 2 years in which AAPL could add that deferred cash to the bottom line).

  2. I really love my 150 Apple shares and will keep them even they rise very slowly. 

    But what I love much more are my 15.000 Nokia shares which I bought at their historic low some weeks ago. They went up 25% in one month and will rise a lot due to their new phones. 

    Even I would never ever buy a Nokia again I was always sure they will come back one day. Too big to fail. Windows Phone was the right choice for them even I prefer iOS by far. 

    Never buy shares by your personal choice only. 

      1. You may call it stupid, my bank says it is a great investment. How much your stocks went up in the last 3 / 6 / 12 months?

        Even I bought Apple hardware only this year for over 100,000 Euros for my company, I never forget that other people have other choices.

        Stupid, really.

        1. Oh no, quite the opposite. The bank guy was congratulating me. I would never take an advise from the bank. They have no idea of anything.

          Here is the truth: MDN wrote about plummeting Nokia shares. Then I had a closer look into their portfolio – and bought. MDN is a great adviser, even they never wanted to be.

          Not in every case, for sure. RIM is DCW, never would buy a share from them, no matter how often they plummet again. I simply have no trust in them.

        2. It’s stupid because buying worthless companies is, in the long term, a losing strategy. Buying apple is smart in the long run because Apple is a debt free, cash rich company with strong sales and massive growth potential. Nokia is a shade of its former self, and is desperate. The possibility of it bouncing back is not worth the risk, esp. when there are safer places to put your money.

      2. … “stupid”? He loves his 150 shares of AAPL. He bought 15,000 shares of Nokia a few weeks ago – at a historic low. They have risen 25% since, and new models are due soon with the latest (7.5) Windows OS. The one that has been praised by David Pogue! Now, AAPL was at a recent ‘low’, perhaps he should have taken his profit from at least some of the Nokia shares to buy more AAPL, but the rest sounds like a perfectly logical profit plan.

        1. I will continue to buy AAPL since I am absolutely sure they are undervalued. But as long as Apple doesn’t do the 1:10 stock split the rise will be very limited.

          The price just look like to be very high. This is never good for future rises. The day they do the stock split the ralley starts again.

        1. Idiot. Just because Apple is a great buy does not mean any other competitor is “worthless” and a poor buy. You are a great example of an emotional investor who will one day get his ass handed to him.

    1. If you do CAKE curves for AAPL and NOK, adjust for PB&J and BAKE, it’s obvious that despite volatility, AAPL has more potential upside.

      In a way, asking which stock you’d rather own is not unlike asking which company’s phone you’d rather own.

      1. Talk sense, man! We’re talking about stocks, not food! Why are you talking about Apples, cakes, baking, and peanut butter and jelly?

        (kidding of course… disclosure: long on aapl, and proud of it)

  3. “Using simple fundamental metrics, Apple is severely undervalued despite its big market cap.”

    Using fundamental metrics? Gimme a break. If the stock market relied on fundamental metrics, Amazon shares would be half of what they are. Instead, you’ll see Amazon shares back to where they were in a week or two and Apple’s shares will be up and down like a little kid on a pogo stick, bouncing around the $400 mark for months. No investors are buying the Apple hype about Siri or Siri-empowered iTVs, potential iPhone sales in China or iPhones in the enterprise. Apple shares are still floundering around without direction. All I’ve been reading is how the Galaxy S is smoking the iPhone in sales and Apple is slipping down in smartphone sales ranking and that’s what investors are reading and they believe it to be true.

    Yes, the analyst’s figures make Apple sound like a buy, but investors see it as nothing and the stock will remain stuck as it has been. Fundamentals on Wall Street only go but so far. It’s investor enthusiasm and faith in a company that moves shares. Apple really isn’t impressing anyone and it shows. You’ll see how long it will take Apple to recover from that “amazing miss”. Apple is again on the investor’s “Not to be trusted” list.

    Don’t be comparing Apple’s worth to Berkshire Hathaway. Warren Buffet is a wizened god among mortals and if he points his shriveled old finger towards heaven, his stock will go up. Nobody would dare to cross him or try to manipulate his stock. On the other hand, Apple is Wall Street’s pet bitch and anything goes. Short it every other day. Who gives a damn.

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