If you have spent some time reading company balance sheets, you should well know that it is hard to find a company with a big, wonderful 0 (…yes, zero) in the Long term debts line. It is quite normal for companies to issue bonds or get some bank loan in order to finance their development and investments.
This is not true at Apple Inc.
In our previous post dedicated to Job’s masterpiece we have discussed about its brands value (increased this year according to some survey), now it’s interesting to have a look in the financial statements in order to better appreciate this Value Finance Portfolio’s asset. Looking at balance sheet we can see not only 0 long tem debts but also a value of current assets that is 2,4 times current liabilities and an enormous amount of cash of about 15 bil $ available for future investments. It’s literally a fortune.
Apple’s balance sheet is by far one of the most impressive you can find on the stock exchange panorama and well reflects Steve Job’s uniqueness.
Cash flow shows an impressive growth in Net Income (+75% sept 2006-sept2007), cash from operations is big enough to cover the high expenditures of 3 bil $ Apple used in investing activities (industrial and financials). The negative side is that some stocks have been issued for a value of 362 mil$, that causes a little dilution on shareholders stock value, but it represent a negligible problem considering the long positive upside list of other financial data.
Average earnings growth rate, in long term analyst analysis, is about 120%, this transform P/E (=25 ttm) in a sort of hard discount for this magic company.
Other impressive data are ROE equals to 28% and the operating margin of 19%: both this ratios show excellent management skills in guarantee high return on own equities with a superior money management of cost of operations.
Considering the downside of the markets during last months (almost one year now…), Apple represents a great investment with a very large margin of safety in this moment, the company share of our Portfolio is, today, 14% of the total value with an outlook for all the readers of Strong Buy, even despite the threats coming from Google's Androids and Nokia X1 smartphones.
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