Apple, Inc. (NASDAQ:AAPL)

TMF1000 (99.78) Submitted: 11/29/2011 10:23:35 AM : Start Price: $361.57 AAPL Score: -19.39

Caps price $369.32

I consider Apple was of my favorite long-term investment. With the miss on earnings which caused the stock price to drop some, it may provide good short-term opportunities too. The report was in my opinion a good one. It didn’t disappoint me, I couldn’t be happier with the results. I am also glad that some investors sold, I am hoping they sell more so I can finally grab a larger holiday position. And the holidays should be excellent.

The valuation is excellent. The PE at a price of $392 was 14.16. Compaq has a PE of 5.83 and Dell has a PE of 8. Computer companies don’t carry high PEs generally, but Apple deserves their premium and I expect as sales increase, the PE could expand. Compaq sales dropped during the same quarter that Apple’s grew by 39%. Dell sales for the third quarter were up less than 1%. Compaq and Dell’s businesses are in decline, they may not deserve even their present low PEs. Apple does. Apple business is still fully in growth mode.

But perhaps a better way to value Apple is to look at their cash flow yield at $392, the cash flow yield is 9%. Even if they don’t grow any more, they are undervalued by that metric alone. And I am sure they will grow cash flow over the next two years, barring a major economic meltdown. They could easily pay a 4.5% dividend without missing it.

On Wednesday I was able to buy my holiday trading position around $369. In sideway markets, I try to buy much larger positions in only my most high confidence stocks. Apple is one of them. I believe their holiday report will be spectacular.

October 18, 2010 4Q:2010 earnings’ highlights:
** 4Q revenues were $20.343 billion up from $12.207 billion
** Fiscal 2010 $65.225 billion up from $42.905 billion
** TTM revenues were $65.225 billion or $70.22 per share
** 4Q earnings $4.64 up from $2.77
** Fiscal 2010 earnings $15.15 up from $9.08
** Diluted share count 928.825 million
** Cash $51 billion: 0 debt
** Cash flow for the year was $16.59 billion or $17.86 per share
** Cash flow for the quarter was $4.89 billion
** Trading range between October 18, 2010 and January 18, 2011 was $297.76 to $348.48: PE Ratio range was 19.65 to 23: PS Ratio range was 4.24 to 4.96: Cash flow yield was 5.1% to 6%

January 18, 2011 1Q:2011 earnings’ highlights:
** Revenues were $26.741 billion up 70.5% from $15.683 billion
** TTM revenues were $76.283 billion or $81.74 per share
** Earnings per share were $6.43 up from $3.67
** TTM earnings were $17.91 per share
** Cash $59.707 billion: Debt 0
** Diluted share count 933.154 million
** Cash flow was 8.559 billion up from $5.4 billion
** TTM cash flow was $19.74 billion or $21.15 per share
** Gross margins were 38.5% down from 40.9% last year: Operating margins 29.27% down from 30.13%
** Trading range between January 18, 2011 and April 20, 2011 was $320.16 to $364.90: PE Ratio range was 17.88 to 20.37: PS ratio range was 3.92 to 4.46: Cash flow yield was 5.8% to 6.6%

April 20, 2011 2Q:2011 earnings highlights:
** Revenues were $24.667 billion up from $13.499 billion
** TTM revenues were $87.445 billion or $93.44 per share
** Earnings per share were $6.40 up from $3.33
** TTM earnings were $20.98 per share
** Diluted share count 935.944 million
** Cash $65.8 billion: debt 0
** Cash flow for six months was $15.899 billion up from $8.1 billion
** TTM cash flow was $23.4 billion or $26.06 per share
** Gross margins 41.42%: Operating margins 31.92%
** Trading range between April 20, 2011 and July 19, 2011 was $310.50 to $378.65: PE ratio range was 14.80 to 18.05: Cash flow yield range was 6.9% to 8.4%

July 19, 2011 3Q:2011 earnings’ highlights:
** Revenues were $28.571 billion up from $15.7 billion
** TTM revenues were $100.316 billion or $106.96 per share
** Earnings were $7.79 up from $3.51
** TTM earnings were $25.26 per share
** Diluted share count was 937.81 million
** Cash flow for nine months were $24.485 billion up from $11.67 billion
** TTM cash flow was $29.41 billion or $31.35
** Trading range July 19, 2011 and October 18, 2011 was $353.02 to $426.70: PE ratio range was 13.98 to 16.89: PS ratio range was 3.3 to 3.99: Cash flow yield range was 7.4% to 8.9%

October 18, 2011 4Q:2011 earnings’ highlights:
** 4Q Revenues were $28.27 billion up from $20.343 billion
** Fiscal 2011 revenues were $108.249 billion up from $65.225 billion
** TTM revenue were $108.249 billion or $115.22 per share
** Earnings were $7.05 up from $4.64
** TTM earnings were $27.68 per share
** Diluted share count was 939.517 million
** Cash $81.57 billion; Debt
** Cash flow was $33.269 for fiscal 2011 or $35.41 per share
** Cash flow for the quarter was $8.78 billion up 79.6% from 4.89 billion last year
** Gross margins were 40.3%: Operating margins were 30.8%
** Trading range between October 18, 2011 and the present was $394.21 to $408.42: PE Ratio range was 14.24 to 14.76: PS ratio range was 3.42 to 3.55: Cash flow yield range was 8.7% to 9%
** Special note: The stock fell about $24 per share to close at $398.22 a day after the report October 19, 2011.