The Bottom Line
Despite the quarterly earnings miss, Apple's financials remain impressive. At $575 per share, Apple trades for fourteen times earnings. This price-to-earnings ratio is wildly cheap, considering the fact that Apple is averaging 66 percent annual profit growth over the past four years. For the sake of comparison, Amazon shares price out at 180 times earnings, although this corporation only averaged 12 percent annual profit growth during these last four years. Broken down further, Amazon's expensive price comes on the heels of a 54 percent profit decline over the past year.
Apple carries $117.2 billion in cash and securities on its balance sheet. This figure is up significantly from the $81.6 billion in cash and investments at this point last year. $117.2 billion in cash and investments above 936,596,000 shares outstanding calculates out to be $125 per share in cash. If Apple were to effectively pay off its $51.2 billion worth of liabilities, it would still be left with $66 billion, or $70 per share in liquid investments. According to Wall Street, Apple's future earnings power is worth a mere $500 at most.
Apple stock is cheap as a long-term holding. At the very least, we may bide our time with a 1.8 percent dividend yield upon investment. 1.8 percent is far more attractive than zero upon competing fixed income. |
