Apple [APPL]’s “P/E ratio is 13 while the EV/FCF [Enterprise Value to Free Cash Flow ratio] is 7.5,” Asymco reports.
“This means the investment horizon is nearly half of what P/E suggests. (The cash flow yield should give pause),” Asymco reports. “Put another way, the market suggests that Apple has 7 more years of current profitability and not 13. Note that the P/E ratio for the S&P 500 is above 19.”
Asymco writes, “As Apple’s deferrals are increasing investors should look again at what the company’s worth. We had similar confusion when the company was deferring most of its iPhone revenue.”
Much more in the full article here.