**Look for the first issue of Checklist Investor Quarterly in your in-box early next month. We have links to a couple of dozen excellent articles. If you don't think I have your e-mail address, drop me a note at Hewitt.Heiserman@EarningsPower.com. The newsletter is free, so what do you have to lose?**Anand Chokkavelu (TMFBomb) writes a nice column about Ford (F) here:http://www.fool.com/investing/general/2011/12/01/1-stock-to-...My response:Anand –If you look at the total cost of ownership, F sells for 24x free cash flow, per my trusty Old School Value spreadsheet (an excellent tool, btw). In my experience, buying at these elevated multiples leads to frowny-face performance.In contrast, Apple sells for just 10x FCF, adjusted for cash ($82 billion) and debt (none).A couple of points about enterprise value. First, if you use EV, then subtract from FCF the after-tax interest/investment income (nil in AAPL's case) and add AT interest expense. You make these adjustments because in a cash-free, debt-free balance sheet (the theory behind EV), this income/expense disappears. Second, since AAPL has $54 billion of its cash and marketable securities overseas, I deducted from its $82 billion cash hoard a hypothetical $20 billion for taxes, which is tax liability if this money is repatriated to Cupertino and then distributed via a super-dividend to stockholders.Your comments on the quality of Mulally’s stewardship are excellent. Thanks.Hewitt
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |
BATS data provided in real-time. NYSE, NASDAQ and NYSEMKT data delayed 15 minutes.
Real-Time prices provided by BATS. Market data provided by Interactive Data.
Company fundamental data provided by Morningstar. Earnings Estimates, Analyst