The million dollar question for investors when it comes to the world’s only $522 billion company is whether Apple Inc. (AAPL) stock is a value or a value trap. There’s a compelling argument to be made for both sides.
Unfortunately, as is often the case in life, reality is not quite so black and white.
Is Apple (AAPL) Cheap?
Yes, AAPL stock is cheap pretty much any way you look at it. Apple has a price-to-earnings ratio of 10.6 and a forward P/E of 10.6.
Not only are those numbers significantly below the 23.7 P/E ratio of theS&P 500 and the 25.9 P/E of the technology sector, they are well short of the respective valuation ratios of large-cap tech peers Alphabet Inc(GOOG, GOOGL), Facebook Inc (FB), Amazon.com, Inc. (AMZN) and Netflix, Inc. (NFLX).
Even when you look at price-to-operating-cash-flow or price-to-free-cash-flow, AAPL is still the gold standard of the bunch. Apple has a 2.4% dividend yield, it has more than $220 billion in cash on its balance sheet, and it has the most successful product in the history of products: the iPhone.
It’s very hard to argue that AAPL stock isn’t a great bargain by any other standards other than those of the world’s largest and most actively owned stock.
Is Apple (AAPL) Stock a Value Trap?
There is…
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