AAPL Stock Report

2-Year Price History

Ockham's Rating

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AAPL Revenue

As we have often noted, in our valuation methodology, "Cash is King." Well, it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, AAPL the high and low end of the Price to Sales per share ratios are 3.73x and 1.79x respectively.

Notice that AAPL's current Price to Sales per share ratio is 3.12x, which is above its historical average only slightly. So, while not a major concern it is worth noting that from a value perspective AAPL does not look undervalued on a Price to Sales basis. However, were the Price to Sales ratio to drop by 12% (the historical average) then we would become more positive on this stock.

AAPL Cash Earnings

As the old saying goes, "Cash is King!" However, we prefer to capture a few other items within our analysis to identify "cash earnings". Nevertheless, an analysis of Cash Earnings is absolutely pivotal to assessing a company's value, and currently AAPL is significantly below its historical average multiple of cash earnings as calculated by Ockham. Similar to our analysis of sales per share, Ockham looks at the last 10 years of cash earnings levels for AAPL to identify where the current high and low price levels have been historically in relation to profit per share. Again, we utilize a weighted average methodology which relies more heavily on recent years of data. This weighted average framework provides us with an average high Price to Cash Earnings ratio per share of 39.10 and a 19.80 low over the same period.

Now that AAPL’s current price is $142.44 and its Price to Cash Earnings ratio is 22.68, we are very positive on its outlook from the cash earnings perspective. In fact, AAPL is now trading a full 23% below its average historical Price to Cash Earnings ratio at these profit per share levels. When our clients ask us why AAPL has great long term potential, the Cash Earnings levels to current stock is one of our primary reasons. But naturally, now we need for the overall market to recognize this disparity.

AAPL Dividends

A positive Ockham rating does not require a company to pay out an inviting dividend or a dividend at all. However, we believe dividends provide a useful measure of a company's inherent expectations. AAPL may pay a dividend at this time; however, there is an insufficient amount of history to incorporate it into our analysis. Therefore, we are not utilizing the dividends or lack thereof in our study. As AAPL more consistent dividend history is made available, we will begin to factor this into the Ockham approach.