In this video, Motley Fool analyst Andrew Tonner focuses on the key number that investors need to understand at Apple. That number is 6, which is the company's price-to-cash flow ratio. Even though Apple's market cap is around $400 billion, the market is currently valuing Apple at around $263 billion, as the rest of its capital value is tied up in cash and investments.
Apple made around $56 billion in cash from its operations, and stripping out the productive expenditure makes it around $42 billion. Comparing the cash to Apple's market cap means that the company is trading at around 6 times the cash flow, which is significantly low.
Andrew also mentions Apple's growth opportunities, including the potential for a low-cost iPhone and the iWatch. Considering the company's growth opportunities and after eliminating any market noise and estimates, Andrew says Apple seems like a very cheap company trading at $400. Check out the video for more details.
There's no doubt that Apple is at the center of technology's largest revolution ever and that longtime shareholders have been handsomely rewarded, with more than 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.