Why Apple is a value stock

“Apple (AAPL) is a phenomenal growth story and its stock has rewarded the investors well over the last few years,” Shailesh Kumar writes for Seeking Alpha. “But it appears that even with its Market Capitalization touching $330 B, and the stock having posted a 47% gain in the last 12 months, the shares are still undervalued.”

“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.”

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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.]

24 Comments

  1. What a bozo anal-yst, writing a crap piece.

    Price to Book (value)? No sane individual considers that for an established company.

    Apple should only keep $2 billion on hand? Yeah, right.

    MDN – why didn’t you ream this ass clown a new one for his stupidity?

  2. iPHONE 5 is right around the corner! Expect unprecendeted demand for it that will skyrocket the price of AAPL. I need to load up before its announced. It will be a joyous ride on the gravy train. Most holiday seasons see huge increases in AAPL shareholder wealth.

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