CHEAP STOCK Still - Apple Inc. (NASDAQ:AAPL), Says analyst
Analyst Brian Gilmartin from Seeking Alpha stated that Apple Inc. (NASDAQ:AAPL) is a cheap stock.
In reference to Apple Inc. (NASDAQ:AAPL) Valuation, Gilmartin remarked that with the company "trading at 5.5(x) 4-quarter trailing cash-flow and 7(x) free-cash-flow, (that is all "ex-cash) there is no question AAPL is a cheap stock, with very poor expectations modeled into fiscal 2014 and 2015. Cheap valuation and low expectations is often a good methodology for being long a stock."
Citing Carl Icahn's CNBC interview on Oct. 1, Gilmartin stated that "future stock price action might be driven by maximizing shareholder value, versus evolving the business model."
"Our internal valuation model assigns an intrinsic value to AAPL of $465, while Morningstar thinks AAPL's intrinsic value is $600. Splitting the difference, a trade up to $550 might be a better sell price than a long price," Gilmartin further explained
However, Gilmartin also said that Apple Inc. (NASDAQ:AAPL) earnings and revenue growth might change the situation.
On Tuesday, Icahn tweeted that his dinner with Apple CEO Tim Cook pushed through and that he prodded Cook for a $150 billion share buyback and that they will be discussing the matter again in the near future.
Had a cordial dinner with Tim last night. We pushed hard for a 150 billion buyback. We decided to continue dialogue in about three weeks.
— Carl Icahn (@Carl_C_Icahn) October 1, 2013
In his interview with CNBC, he expressed enthusiasm about the looming buyback.
"It's a no-brainer and it makes no sense for this company with their multiple being so low not to do a major major buyback. And there's another reason that I mention, that I think might go forgotten, the fact that you can borrow money so cheaply today. I don't think we are going to see this again. They have a golden opportunity to go borrow money."
He expound on the fact that Apple Inc. (NASDAQ:AAPL) is missing a gold mine if the company does not issue a bigger share buyback. He also expressed his intention to make sure that there will be representations for the shareholders despite the board's unwillingness to succumb to a bigger buyback.
"I feel very strongly about this. I can't promise you the stock will go up and I can't promise you they will do the buyback. But I can promise you that I'm not going away until they hear a lot more from me concerning this."
Back in Aug., Icahn was quoted saying that if Apple, indeed, will issue a larger share buyback, Apple Inc. (NASDAQ:AAPL) can be worth as much as $700 a share.
Meanwhile, Apple Inc. (NASDAQ:AAPL) stock is at $488.63 increasing at 2.49 percent on Oct. 2, based on real time data published by NASDAQ OMX.