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.