Tags
$AAPL, AAPL:US, Apple, circle of competence, deferred taxes, disruption, economic moat, growth investing, growth vs. value, innovation, Margin of Safety, Philip Fisher, Steve Jobs, technology, value investing, Warren Buffett
We all know the type: Born-again value investors who still have that new car smell. No longer clueless, but the market hasn’t beaten adequate sense (or humility) into them just yet, so they’re still insanely over-confident. Which we tolerate – after all, we were like them once – then they start expounding their new & improved value investing philosophy, and it all goes downhill. I recall one encounter, some years back, where I struggled to get a word in, let alone offer some kind of reality check. Finally, my new guru was forced to pause & finally breathe, so I did the only sensible thing. I lobbed this hand grenade:
So why not buy Apple..?!
All I got was a puzzled look. Repeating the question, I then pummeled him with a veritable laundry list of Apple (AAPL:US) fundamentals & ratios. If he was such a value expert, surely Apple was a screaming value buy?! Needless to say, I never got much of a reply, but it stopped him in his tracks & scared him off…job well done! But the more I thought about it, the more it seemed like a valid question for other investors (& even me…). And a question to be asked in a spirit of honest inquiry. I mean, let’s look at Apple’s numbers today:
- Net sales have reached $216 billion (as of FY-2016).
- Net sales increased 99% & over 1,000% in last 5 & 10 years, respectively.
- Gross margin increased to 39% ($84 billion) in last 10 yrs.
- Op profit margin more than doubled to 28% ($60 billion) in last 10 yrs.
- Net income increased 76% & almost 2,200% in last 5 & 10 yrs.
- EPS compounded by 16% pa & 38% pa in last 5 & 10 yrs.
- Net cash/investments inc’d almost 1,400% to $151 billion in last 10 yrs.
- Current share price (as of cob Feb-7th): $131.53
- Current market cap: $690 billion
- Current P/S ratio: 3.2 times
- Ex-net cash/investments P/S ratio: 2.4 times
- Current P/E ratio: 15.7 times
- Ex-net cash/investments P/E ratio: 12.1 times
- Current FCF ratio: 13.2 times
- Ex-net cash/investments FCF ratio: 10.1 times
OK, just take a moment & marvel…even with the share price now approaching all-time highs again, surely Apple’s still a screaming value buy?
So why not buy Apple..?!
Wexboy 