Some key Apple numbers put in context

apple by Abhijit Tembhekar

Is Apple stock cheap at the moment?
[Via Edible Apple]

With Apple’s stock price currently hovering under $245, Chad Brand of Seeking Alpha lays forth the argument that the stock is actually undervalued at the moment.

Despite my roots as a value manager, in recent weeks I have been a fairly aggressive buyer of Apple shares. Such an investment may not seem appropriate for a value investor but as the stock has steadily fallen, dropping below $250 per share, it has actually become quite undervalued. And not just relative to its growth rate, but the broad market as well.

Flush with $45 billion in cash and investments ($50 per share) and no debt, Apple sports an enterprise value of about $190 per share. Compare that to $15 of earnings this year and enough catalysts to make next year’s estimate of $18 seem easily attainable, and you have a stock that actually trades at a discount to the S&P 500. And therein lies the core explanation for my heightened interest recently.

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Fifty dollars of every share is actually cash that apple has. So the real value the market is placing on Apple in $190. So its Price to Earnings ratio is 13 for this year and 11 for next.

So, one of the largest corporations in America has a P/E ratio almost over 1/3 lower than the current market which is at 19.25. If Apple was valued at the market’s current average, its price should be about $340 based on this years earnings and $396 based on next year’s.