Apple Inc. (AAPL), Cirrus Logic, Inc. (CRUS): This Metric Will Have You Buying

With Apple Inc.  (NASDAQ:AAPL) and Cirrus Logic, Inc. (NASDAQ:CRUS) holding hands today as they dive into new 52-week lows, how cheap have shares gotten? Answer: Very.

Apple Inc. (NASDAQ:AAPL)In sickness and in health
Both companies have ridden high together over the past five years, and likewise the couple has fallen without leaving each other’s side. At least they’ve still got each other, even if they’ve both given up substantial gains over the past six months.

AAPL Chart

AAPL data by YCharts.

Starting with the Mac maker, shares now trade at just 9.2 times earnings. That’s almost half of the 17.9 times earnings that the broader market currently trades at. If you back out the $146 per share in cash tha Apple Inc.  (NASDAQ:AAPL)  was sitting on at the end of December, that figure falls to 5.8.

Taking it a bit further, Apple Inc.  (NASDAQ:AAPL) has no doubt added even more dollars to its money mountain over the past three months. Even after paying out its dividend and buying back some shares, it’s entirely feasible for its cash position to grow by another $10 billion this quarter (which investors won’t find out about until next Tuesday).

Earnings are expected to decline this quarter due to the tough year-over-year comparison. Analysts are expecting earnings per share of $10.13. Apple Inc.  (NASDAQ:AAPL) doesn’t provide specific EPS guidance anymore, but based on the metrics it does issue, the company is expecting roughly $9.18 per share in earnings, according to my calculations. Assuming $10 billion in cash added and $9.18 EPS, Apple Inc.  (NASDAQ:AAPL) would still be trading at six times earnings (excluding cash).

That type of valuation is for companies on their deathbeds, not companies at the top of their game facing moderate deceleration.

Even Cirrus Logic, Inc. (NASDAQ:CRUS)’s valuation is in the bargain bin. The audio chip maker’s earnings multiple has now dipped below 8 on its preliminary earnings figures, which were admittedly bad. Still, the company expects gross margin to recover to 50% to 52% next quarter after working through the inventory charges, and its revenue guidance of $150 million to $170 million for the June quarter calls for 62% growth at the midpoint.

That level of growth isn’t what most would typically expect from a company trading at less than eight times earnings. The speed bump today will prove to be a short-term lull ahead of a strong product cycle refresh from Cirrus Logic, Inc. (NASDAQ:CRUS)’s biggest customer. When Apple inevitably rebounds on new iPhones and iPads, expect Cirrus to do likewise.

Both companies report earnings next week. Cirrus has mostly showed its hand; it probably won’t have any big surprises. Apple, on the other hand, has a lot of uncertainty surrounding it. If iPhone sales are soft and June guidance leaves something to be desired, Apple could easily head lower — further into the bargain bin.

The article Apple and Cirrus Logic Are Both Absurdly Cheap at Their New Lows originally appeared on Fool.com.

Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Cirrus Logic

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!