Chart of the Day – $AAPL Cash on the Balance Sheet

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One of the longstanding arguments for owning AAPL shares has been the stock’s excess cash on the balance sheet.  Hedge fund manager David Einhorn has been rattling the executive office to get them to pay out some of that excess cash.

The Bespoke Investment Group had a stellar chart in a post yesterday, displaying AAPL’s cash as a percentage of its market cap since the year 2000:

Screen Shot 2013-02-22 at 12.13.38 PM

 

When AAPL was a much smaller company, trying to get back off the mat, its cash as a percentage of market cap was near 100% (similar to a company like BBRY when it traded near $6 this fall).  However, I think the more relevant comparison is the past 5 years, as AAPL is now a much larger company and a different beast than it was 10 years.

In that regard, the cash / market cap ratio is currently at 33%, near the high end of the past 5 years.  That should offer some comfort for the long-term bulls in the stock.  However, excess cash on the balance sheet for a company as large as AAPL also indicates a dearth of good investment opportunities.  Cash by itself does not generate earnings or business expansion.

I view this chart as simply one more piece of evidence that AAPL is transforming from a growth stock into a value stock, similar to MSFT from 10 years ago.  Growth is difficult to achieve for a $400 billion market cap company (just ask XOM).  But it can offer decent investment value for those willing to be patient in the long run.