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A Look at Apple’s Valuation

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Jul. 11 2017, Updated 7:35 a.m. ET

Inside Apple’s price and valuation multiples

Apple (AAPL) has a current book value per share of ~$25.7, compared to its expected book value per share of ~$26.5. Apple shares are trading at a price-to-book value (or PBV) of ~5.6x.

In comparison, peer companies Nokia (NOK), GoPro (GPRO), Fitbit (FIT), and Cisco Systems (CSCO) have current book values per share of ~$3.6, $2.6, ~$4.3, and ~$13.1, respectively.

Apple’s price-to-sales ratio is ~3.4x, compared to its estimated price-to-sales ratio of ~3.3x.

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Examining Apple’s cash flow metrics

Apple has $67.1 billion in cash on hand. Its price-to-cash flow and price-to-free cash flow ratios are 11.3x and 18.5x, respectively. For the trailing 12 months, the company’s EV-to-cash flow ratio is 11.8x, and its EV-to-free cash flow is 14.7x.

A look at Apple’s earnings numbers

Apple’s EBITDA (earnings before interest, tax, depreciation, and amortization) fell 2% to $69.7 million in 2016. Analysts are expecting the company to post EBITDA of $71.8 million in 2017. Its shares are changing hands at a price-to-EBITDA ratio of 10.7x.

Peer companies Nokia, GoPro, Fitbit, and Cisco Systems are trading at price-to-EBITDA ratios of 30.6x, -4.2x, -6.7x, and 10.3x, respectively.

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Understanding Apple’s earnings and sales

Apple’s last reported annual EPS (earnings per share) of $8.4 stemmed from its total revenue of $220.5 billion. Its revenue fell 3% in 2016. For the coming year, its revenue is expected to be $253.7 billion, and its EPS are expected to be $8.93.

What amount of debt is Apple carrying?

Apple is carrying total debt of $98.5 billion, a total of its short-term debt of $13.9 billion and its long-term debt of $84.5 billion. The company has total capital of $232.6 billion, so its total debt-to-total capital ratio is 42%.

Looking at the company’s debt in relation to its assets, equity, and EBITDA, we’ll find that it has debt-to-assets, debt-to-equity, and debt-to-EBITDA ratios of 0.29x, 73.5x, and 1.4x, respectively.

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