Appleshuttle

Understanding Valuation Multiples With Respect to Cash

To ignore cash, except to recognize the interest it generates, is stupid.

When a company is acquired, you better believe their cash balance is
used to determine the price being paid. Higher cash should equal a much higher P/E because it gives a company so many more options to expand than a company that relies on debt. It also makes a company much more likely to survive any downturn.

On a strickly mathmatical basis, you should not back out cash to calculate PE. But to determine what PE a company deserves, cash is a key element in the math along with its growth rate.

Understanding Valuation Multiples With Respect to Cash

To ignore cash, except to recognize the interest it generates, is stupid.

When a company is acquired, you better believe their cash balance is
used to determine the price being paid. Higher cash should equal a much higher P/E because it gives a company so many more options to expand than a company that relies on debt. It also makes a company much more likely to survive any downturn.

On a strickly mathmatical basis, you should not back out cash to calculate PE. But to determine what PE a company deserves, cash is a key element in the math along with its growth rate.

Apple: Are Investors Overlooking Cash Earnings?

One other important point is that your calculations of PE do not factor in
the huge(over $20 Billion) in cash no no debt Apple keeps on its bslnce sheet. That works out to over $23 per share in cash.

Apple: Are Investors Overlooking Cash Earnings?

Well, you almost get it. First off, Apple always beats their guidance when it comes to earnings per share and earnings..or at least has for several years. This past quarter, for example, they beat their earnings guidane by more than 25% and their margin guidance by a couple of percent. I think Apple's guidance should only be interpreted as a starting point or base.

The other error you make is believing Apple will only grow their earnings 16%. Apple has grown their earnings by several times that and nearly twice that this past quarter; a quarter with little reported iphone
revenues at all(they stopped accruing iphone earnings for much of the quarter due to the new software coming out and they sold very few iphones due to selling out the old model and transitioning to the new phone).

Earnings estimates may have come down the last month, but the target price for Apples stock keeps rising as most analysts understand
the accounting issues you talk about in this article, and they know the investing community will catch on at some point not long from now.

Apple Math: Market Share over Margins

Great Article Jason. I've owned Apple stock for a long time and I've never seen a time when there was this much potential to grow earnings and never have future earnings been guaranteed like they are now that Apple defers revenue. I'm glad you get it and glad you write about it.

Even if Apple sells half as many phones as you say they will their earnings will grow rapidly and we will really see this starting this time next year when a full 8 quarters of deferred revenue are realized in one quarter. Even if their were zero revenue from iphones this stock would be a buy based on its rapidly growing mac marketshare, but with it makes this stock a no brainer.

Can you imagine how much revenue Apple will generate when the iphone becomes a mature product with several models to choose from like the ipod? Making a product that is subsidized(by the phone carriers) is ideal for Apple as it takes away the main obstacle those not buying Apple products give for choosing another brand....cost.

Apple: Expecting Short-Term Weakness

Lackluster?? Are you kidding me? Earnings grew superbly despite Apple
deferring much of its lucrative iphone earnings over the next two years
instead of when it is earned through sales.

If you had done your homework you'd know that Apple always guides
low on both earnings and margins including this past "lackluster" quarter where it beat its margin guidance by several points and its earnings guidance by over 26%. If it does have lower margins going forward, it will be because they have introduced new products with
lower margins and will add to earnings as a new category.

Since when is growing their core business(the mac) at several times
the growth of PC's and having a record June quarter considered lackluster? Do you consider the sales of the new iphone lackluster?
Should the lines for the new iphone be 10 hours long instead of 5 hours 2 weeks after introduction before you consider it robust?

The next time you value Apple look at its cash on hand, its low PE vs.
the growth its had each quarter for the past few years and is likely to have in the future and ditch your meaningless vodoo charts and using
Apples guidance to determine value..when that guidance has been extremely conservative for every quarter for years now.

Apple: Unlocking iPhone Profits

Well, what do you know, someone actually understands Apple's earnings.

Amazing The Street can't grasp that in addition to sandbagging regular
earnings by about 25% in their guidance, because of their interpretation of federal regulations, the number they are reporting may under report earnings by as much as $1.00 a share this quarter.
They real saving grace about this is Apple will be reporting earnings
from this quarter's explosive sales for two years(it will increase earnings every quarter for two years). Every quarter at least for the next year (two years after the iphone first went on sale)earnings will automatically grow faster as every iphone sold in the prior two years is accounted for in their earnings.

apple is consistently growing their earnings, despite this under reporting of actual earnings, by a percentage higher than their PE.
This is unheard of. If you consider things like their cash, no debt,
deferred earnings, and actual reported earnings, Apple is one of the
cheaper valued stocks out their at the same time as being one of the hottest companies out there. The next time someone says to you that
they don't want to buy Apple stock because its too expensive, give them an earful!

T