AAPL Fundamental Research Investment Analysis, Apple, Inc.

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Apple, Incorporated (AAPL)

The Razor's Edge

2-Year Price History

Recent Price
(2/13/2009)
$99.16
52-Week Price
$78.20 - $192.24
Market Capitalization
$88.1 Billion
Dividend Yield
0.00%
Most Recent Dividend
$0.00

About Apple, Inc.

Apple, Incorporated is considered to operate in the Technology sector. They specifically operate in the Personal Computers business segment contained within the Computer Hardware industry.

The Company designs, manufactures and markets personal computers, portable digital music players and mobile communication devices and sell a variety of related software, services, peripherals and networking solutions.

Ockham's Rating

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AAPL Revenue

For a long time, value investors have used the current share price relative to sales per share levels as an important valuation tool. We utilize a historical weighted average methodology that treats recent years more importantly in the calculation. When looking at AAPL through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 10 years are 3.45x and 1.66x respectively.

Utilizing this range we can see that AAPL’s current Price to Sales per share ratio of 2.17x is significantly below its average levels historically. In fact, with a current price of $99.16, AAPL is a full 16% below its average Price to Sales ratio at comparable sales levels. This is a rare occurrence and, when taken in context of the other areas of our analysis, can be a strong positive for our outlook for AAPL.

AAPL Cash Earnings

Looking at AAPL specifically in their Cash Earnings capabilities, Ockham views AAPL as 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 36.51 and a 18.53 low over the same period.

Now that AAPL’s current price is $99.16 and its Price to Cash Earnings ratio is 14.15, we are very positive on its outlook from the cash earnings perspective. In fact, AAPL is now trading a full 49% 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. While we do like to see companies with healthy and growing dividends, it is not appropriate for all companies, especially those focused on growth. We regard AAPL as neutral in terms of dividends because they have no history of paying a dividend and continue to reinvest that money for growth purposes.

Peer Comparison

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Apple, Inc. Industry Grouping

(2/13/2009)
Company Ticker Market Cap (Ml) Latest
Price
Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate
5-Yr.
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not incuding AAPL) 6.75 6.56 » 316.98 1.20 1.17 » 13.51 12.21% 27.87%
*10 year range does not include current year values
International Business Machines Corp. IBM $126.1 Billion $93.84 7.17 5.61 » 27.38 1.19 0.90 » 2.68 4.00% 29.90%
Cisco Systems, Inc. CSCO $94.3 Billion $16.10 8.21 10.95 » 261.76 2.25 2.99 » 30.95 15.94% 22.80%
Apple, Inc. AAPL $88.1 Billion $99.16 14.23 9.73 » 186.01 2.18 0.75 » 5.63 39.23% 18.06%
Hewlett-Packard Company HPQ $86.7 Billion $35.87 6.63 6.18 » 62.91 0.78 0.54 » 3.10 10.13% 14.46%
EMC Corp. EMC $24.6 Billion $12.06 7.56 5.81 » 1171.43 1.50 1.16 » 25.97 19.46% 9.36%
Dell, Inc. DELL $17.7 Billion $9.12 4.15 4.25 » 61.40 0.28 0.27 » 4.87 11.54% 62.82%
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2/13/2009 5:44 PM
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2/13/2009 4:29 PM
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2/13/2009 3:59 PM
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2/13/2009 3:11 PM
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2/13/2009 3:11 PM
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2/13/2009 3:03 PM
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2/13/2009 11:34 AM
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2/13/2009 10:04 AM
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2/13/2009 9:44 AM
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2/13/2009 9:37 AM
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2/13/2009 9:36 AM
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2/13/2009 9:32 AM
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2/13/2009 9:31 AM
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2/13/2009 9:26 AM
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2/12/2009 6:18 PM
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2/12/2009 6:08 PM
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2/12/2009 5:06 PM
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2/12/2009 4:44 PM
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2/12/2009 3:04 PM
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2/12/2009 3:03 PM
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2/12/2009 1:03 PM
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2/12/2009 10:13 AM
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2/12/2009 10:10 AM
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2/12/2009 9:05 AM
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2/11/2009 10:04 AM
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2/11/2009 9:32 AM
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2/11/2009 9:32 AM
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2/11/2009 9:06 AM
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2/10/2009 3:04 PM
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2/10/2009 9:32 AM
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2/10/2009 8:46 AM
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Key Fundamentals

AAPL - Apple, Incorporated Fundamentals
Price (2/13/2009) $99.16
Volume (2/13/2009) 21.4 Million
10 Day Average Volume 24.6 Million
13 Week Price Range $78.20 - $103.60
52 Week Price Range $78.20 - $192.24
LTM Revenue $33.0 Billion
 
Shares Outstanding (09/2008) 888.9 Million
Market Capitalization $88.1 Billion
Shares Held By Institutions 624.9 Million
Institutional Holders 1,555
% Shares Held By Institutions 70.20%
Earnings Per Share (EPS) $5.36
P/E Ratio 18.40
Book Value Per Share $23.66
 
Gross Margin 36.90%
Quarterly Dividend 0.00
Dividend Yield 0.00%
Beta 1.88
Fiscal Year Ends September