“The P/E is fluctuating on either side of 20 but when considering trailing growth, comparable companies, the macroeconomic conditions and guidance the value of the company is reaching new lows,” Dediu reports. “Earnings were 75% higher in 2010 than the year before. So based on the growth, the rule-of-thumb ratio P/E/training Growth (P/E/tG) is 0.24. This ratio (where 1.0 is seen as ‘fair value’) is the lowest since July 2009, during the first months of recession recovery.”
Dediu reports, “Given the new low in valuation contrasted with optimism on behalf of many (including management), on some forums there is discussion about Apple becoming the target for a take-over. There is some perverse merit to this logic. With $64 in cash, $25/yr in earnings and 75% growth it’s so cheap that if credit were available, it would make a tempting candidate.”
Read more in the full article here.
Somebody get me my checkbook!
krquet’s point regarding Apple’s cash hoard is a good one.
This is so fucking stupid I almost puked.
What??? No MDN take? It’s the only reason I clicked on the article. Come on!
For those of you immune to subtlety: Horace Dediu’s article infers that no matter how you slice + dice the numbers, Apple stock should be a screaming buy!!
Now go read some more of his excellent Asymco posts and get up to speed…
krquet’s points and the basic point made in article are right on. But this type of logic is what has totally screwed up the US economy. Hedge funds, etc. buying companies based on money generation only and not because the fund can bring anything of substance to the table. Many good US companies have been destroyed because of the sickness in the heads of hedge fund managers and others who can’t see beyond the greenbacks. Now let the ranting begin about the free enterprise system and how markets need to be free, blah, blah, blah!
I think you’re all overreacting before allowing the facts to sink in. He’s right.
Apple is sorely undervalued, which means anyone interested in a dip and flip could stand to make billions in a subsequent sale.
That’s the reality! Now whether anyone with that kind of money (Arabs, Russians, conglomerates) would believe Dediu’s line of reasoning is another matter altogether. He is after all a one-man firm, not unlike Rob Enderle, but the real difference is Dediu loves Apple and Enderle hates it.
These are the same assholes with the same mentality that we (US taxpayers) had to bail out after they managed to crash the markets worldwide. It just pisses them off that Apple does not buy into the Wall Street mindset and eff the company up long term for short term greed.
To overtake a company requires parties to purchase a majority of stock. Good luck with that, freak’n moron.
Exactly who do they think would be willing to selling large chunks of shares and even better, who is going to finance such a purchase? Hell, the US government is only 300 billion short of being bankrupt with 14 Trillion in debt. As “Silverhawk” stated, maybe the Chinese Government.
Is he trying to show he’s good at math but dumb as a post and is still a virgin?
I’m sure there is a Saudi royal family that could find the cash stuffed behind a tent flap or two.
The point is that Apple is undervalued and should be a target for everyone’s stock portfolio.
Buy, buy, buy.
To argue that Apple is undervalued is one thing. To suggest it might be a candidate for acquisition is absurd in the extreme. An acquisition would go for a premium over its current value – so think $500 billion at a minimum. The only places one finds that kind of cash are the sovereign wealth funds of Persian Gulf potentates, China, and the like. And not many working for Apple today want to work for them. Even Norway, which has a large fund, would have to liquidate many of its holdings to raise the cash.
Move along folks. Nothing to see here.
I’m about to buy it, but who leaked my plans?
Apple, a wholly owned subsidiary of Microsoft. I like it. I like it a lot.
There would be no surer way to destroy the future of this company than to put the genius engineers and managers under a strange corporate overlord.
Suggest this item was published before its release date: April 1.
Ok, if I sell my comic book collection and hold off on buying the iPad2….
OK, babies…
You can piss and moan all you about asymco’s blog.
If you have any brains at all, you will be evaluating the market and investing in your future.
His point is valid. Under this pricing and growth scenario, AAPL would be a takeover target – that is, if anybody could afford it.
Horace has more brains than most of you combined. You would do well to read, learn, and learn to think before posting out your butts.
Um, a few excessively rich bastards with some credit could do it as a partnered venture. Its entirely plausible.
I really needed a good laugh today. Thanks for posting.
@ ivid: “a few excessively rich bastards with some credit could do it as a partnered venture”
No, they couldn’t, even if highly leveraged. Even wealthy sovereign nations would have a hard time raising the $500 billion+ required to acquire Apple.
Asymco’s point is simply that Apple is grossly undervalued. Dediu is quite correct on that point.
@ DogGone
You would have to buy from any individual investors. AAPL is something like 70% institutionally owned.
AAPL cant be bought… Steve wont allow it…
Apple knows whats going on… These analysts want Apple to STOP hording their billions…
But they are a worldwide company now… They are weighing the possibility of the US $ being so weak that they will lose their buying power regarding components…
Apple will eventually DROP prices accordingly… The U.S. economy has trouble coming…
In fact everyone should pay close attention and pay off your debts NOW.
Well, i got off the subject a bit…
APPLE IS NOT FOR SALE… AND THEIR $BILLIONS will SAVE THE COMPANY FROM POSSIBLE ECONOMIC COLLAPSE…
@ Macromancer: I’m with you:
Source: “With $64 in cash, $25/yr in earnings and 75% growth it’s so cheap that if credit were available, it would make a tempting candidate.” (0_o)
Apparently this is BiZZaRo Day. If MDN had added a snide comment I would have cared.
@ m159 sez: “There would be no surer way to destroy the future of this company than to put the genius engineers and managers under a strange corporate overlord.”
Indeed. Let’s put it another way:
Q: What is the one company that has THRIVED in spite of the economic head-on collision perpetrated by the US Corporate Oligarchy?
A: APPLE
IOW: What company in the USA doesn’t ENVY Apple’s everything, from engineering to management to marketing? Hmm?
Therefore, what company wouldn’t want to be taken over BY Apple?
The only reason some dumbass moneybags would take over Apple would be to VAMPIRIZE it in a fit of psychopathic ecstacy, the kind of psychopath that enjoys the ongoing Bush Depression. Such nutjobs belong in a prison psych ward, NOT running a company. Sadly, bizzniz is all-to-often where they turn up. Biznizz (as opposed to business) LOVES a good psychopath.
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*wouldn’t
Sorry that took so many hours to correct. >.<
Horace Dediu is an analyst-extraordinaire. As others have pointed out, and to anyone with the IQ of a 15 year old, his point is extremely well made. Apple is significantly undervalued, and would, should the cash be available, make for an unparallelled takeover target.
When the market will finally awake to this, who knows. But as some of the comments on this forum show, wall street does not retain a monopoly on foolishness.