Is Apple Inc. (AAPL)’s True Value Below $250?

Source: SEC filings and author’s calculations. Fiscal quarters shown. TTM = trailing-12-months.

Trainer broadly proclaims that Apple is “destined to be just another consumer electronics company,” which somehow implies that Apple’s business will implode overnight. His estimates effectively ignore the iPad altogether, which was released after 2009 and remains young. Trainer also assumes that Apple will become free cash flow negative to the tune of $3.6 billion, compared to the $44 billion in positive free cash flow that Apple’s generated over the past four quarters.

To be fair, if Apple’s fundamentals did self-destruct at the tweaking of a spreadsheet cell, then a $240 price target could be warranted. In reality, companies don’t tend to see operating profits plunge by 80% at the drop of a hat, and investors would gradually observe any potential deterioration as it occurs over many quarters.

By the same rationale, I can apply some tweaks of my own, except I’ll play bull to Trainer’s bear. By my estimates, if Apple were to sell a bazillion iPhones tomorrow, it would be worth a millionty dollars per share today.

The good news is that Apple’s business doesn’t rely on Trainer’s spreadsheet.

The article Could Apple Possibly Be Worth Just $240? originally appeared on Fool.com.

Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Microsoft.

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