“Apple (AAPL) is the world’s richest and most powerful technology company. Unfortunately, while the company does command the highest market capitalization in all of tech, it is not the most valuable company on an enterprise value basis,” Ashraf Eassa writes for Seeking Alpha. “That honor, believe it or not, goes to Wall Street darling, Google (GOOG).”
“Apple’s market capitalization as of the time of writing sits pretty at $480 billion, while Google’s sits at $400 billion. However, Google has about $58 billion in net cash on the books (suggesting that the business is valued at $342 billion),” Eassa writes. “Apple, on the other hand, has about $141 billion in net cash, implying an enterprise value of $339 billion!”
“Apple trades at 7.7x EV/FCF while Google trades at 30.3x EV/FCF. Now, Google and Apple aren’t exactly operating in the same businesses, and frankly, Google’s business is “safer” than Apple’s, but this valuation gap is pretty ridiculous and indicative of one thing: the market expects Google’s free cash flow to grow ‘to da moon’ and Apple’s to, at some point, crater as a result of competitive pressures of secular headwinds,” Eassa writes. “While everyone’s gaga for Google, Apple’s opportunities are still well ahead of it.”
Read more in the full article here.
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