Apple is known as a cash cow. Since 2003, its free cash flow has grown significantly, from $125 million to $41.45 billion. According to Yahoo! Finance, the market is valuing Apple at nearly 6.6x EV/EBITDA. However, I personally think this figure is much lower. With $137 billion in cash and no debt, Apple’s enterprise value is only $303 billion. As Apple generated $59.3 billion in EBITDA over the last twelve months, Apple’s EV multiples is around 5.1x.
Google, with a total market cap of $255.14 billion, is trading at nearly $774 per share. Google also had a huge cash balance. As of December 2012, Google had $71.5 billion in total stockholders’ equity, $4.5 billion in debt and $48 billion in cash. Thus, the cash balance accounted for nearly 19% of Google’s total market cap. Blackberry’s cash on hand, $2.73 billion, accounted for more than 31% of Blackberry’s total market cap. It is the cheapest company among the three. With $8.73 billion in market cap, Blackberry is valued at only 3.56x EV/EBITDA.
Foolish Bottom Line
I think a lot of pessimism has been reflected into Apple’s stock price. With the huge cash on hand and low valuation, Apple is a good value stock to hold for a long-term.
The article Unlocking Apple’s Shareholder Value originally appeared on Fool.com and is written by Anh HOANG.
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