Comments on: Running The Numbers – Apple (AAPL) Looks Cheap http://blog.valuecruncher.com/2008/09/running-the-numbers-%e2%80%93-apple-aapl-looks-cheap/ Wed, 17 Mar 2010 06:53:33 +0000 http://wordpress.org/?v=2.7 hourly 1 By: The Crunch http://blog.valuecruncher.com/2008/09/running-the-numbers-%e2%80%93-apple-aapl-looks-cheap/comment-page-1/#comment-1503 The Crunch Tue, 23 Sep 2008 08:04:20 +0000 http://blog.valuecruncher.com/?p=263#comment-1503 Our valuation is a discounted cash flow (DCF) analysis. A DCF looks to determine the intrinsic value of the share - based on the cash flows of the business and their variability (risk). It doesn't take financial market sentiment into account. The DCF is saying - "based on these assumptions then the value of the asset should be $X". The market may have a different perspective. Remember - valuation is not the same as price. Corporate finance theory would suggest these should be the same - but that isn't always the case. The current events (September 2008) are certainly a case in point. That said - our view is that the current market price is below the intrinsic value of AAPL. That is a good time to buy - if you can take a longer-term perspective. Our valuation is a discounted cash flow (DCF) analysis. A DCF looks to determine the intrinsic value of the share - based on the cash flows of the business and their variability (risk). It doesn’t take financial market sentiment into account. The DCF is saying - “based on these assumptions then the value of the asset should be $X”. The market may have a different perspective.

Remember - valuation is not the same as price. Corporate finance theory would suggest these should be the same - but that isn’t always the case. The current events (September 2008) are certainly a case in point.

That said - our view is that the current market price is below the intrinsic value of AAPL. That is a good time to buy - if you can take a longer-term perspective.

]]> By: joey http://blog.valuecruncher.com/2008/09/running-the-numbers-%e2%80%93-apple-aapl-looks-cheap/comment-page-1/#comment-1499 joey Tue, 23 Sep 2008 03:09:35 +0000 http://blog.valuecruncher.com/?p=263#comment-1499 what is the assumed PE ratio after these calculations? Regardless of financial analysis, the bear market is telling us it wants PE ratios down as money flees to non-risk assets. how does valuecruncher take this into account? ie: what if the growth rate and profit outcome is the same, but the arbitrary trading multiple compresses. what is the assumed PE ratio after these calculations? Regardless of financial analysis, the bear market is telling us it wants PE ratios down as money flees to non-risk assets. how does valuecruncher take this into account? ie: what if the growth rate and profit outcome is the same, but the arbitrary trading multiple compresses.

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