“I believe that Apple’s valuation is very attractive and that shares could benefit as the company ramps recently released products and introduces new products and services next year,” Masam Abbas writes for The Motley Fool. “Over the long term, I believe that Apple could return much more cash to shareholders through buybacks and dividends, building on recent initiatives. I believe that there is also room for more product platforms that include solutions for live television and lower-end smart phones.”
“Apple has prospects for high organic growth, with open-ended potential to gain share in phones, tablets, and Macs. I view Apple’s upside scenario at $910 based on about a multiple of 15x and a FY14 EPS estimate of $60.66,” Abbas writes. “I believe the biggest issues facing Apple include the risk of losing share to lower-end products and the risk of having to cut prices for key products like iPhones and iPads. I view Apple’s downside scenario at $450 based on a multiple of 7x and FY14 EPS estimate of $60.66.”
Abbas writes, “The price target of $800 is based on a forward multiple of 13x and FY14 EPS estimate of $60.66. I believe that Apple is relatively inexpensive on a P/E basis, especially given its cash position. Currently, Apple is trading at a forward multiple of 9x, well below the 5-year average of 16.7x.”
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Maybe. But right now we’re just over $500. So why waste time speculating about if or when it will hit $1000
Totally in agreement with you Mike!
The shorthand way to state the value of a company’s stock is the P/E ratio. For a rapidly growing and wildly successful company, AAPL is ridiculously cheap. If the stock were priced according to google’s (that one-trick pony) AAPL would now be over $900/share. Dead-in-the-water microsoft’s P/E would have AAPL over $1000/share. And if AAPL had amazon’s P/E, the stock would go for about $1.4 million for every share.
Nice analogy!
There are many other factors that affect the share price of an equity. Market sentiment towards a company and its products is much more important at certain times. Apple has been under fire lately whether fair or not. Competition is a valuable piece of the puzzle too. Apple has a lot of competition now. And that competition is Samsung. Like them or not. In the end, there is no market manipulation as everyone on the site believes. If Apple is worth $450 then that’s what it will be valued. Same goes for $1000. P/E is important but it just isn’t everything when evaluating a company. The whole world isn’t sitting around trying to pick on poor little old Apple. People have better things to do. If people on the site are so certain that Apple is being manipulated then it should be very easy to make money buying puts as Apple goes down. But it’s much easier to complain I guess. Earnings is in a few weeks, I’d be very careful here.
Stock has been undervalued no matter how good they have performed. Never seen anything like it. Fuck it … no amount of cash on hand or revenue growth or profit growth or market share gains will ever get this stock even close to where it should be relative to all of its peers.
I have to agree you there. We’ll just see further P/E compression. As long as you’ve got those Apple bashers screaming that Apple will be dead in 2015 due to Android, Apple’s share price is going to be kept below $600 no matter how much money Apple makes.
Wall Street gives Amazon a P/E of 3500 because they have some belief that Amazon will be some huge money-making machine in a few years, however, doomed Apple deserves less of a P/E than stagnant Microsoft because Wall Street believes Apple won’t be making enough money for investors in a few years. All they’re doing is trying to predict the future. Amazon gets the benefit of the doubt, Apple doesn’t. Apple has never been given the benefit of the doubt because the P/E has been shrinking for years.
I’m afraid a $1000 a share is a pipe dream as long as Apple only relies on selling hardware. They’d be better off branching into search, cloud services or banking/lending.
With $ 60.66 in EPS, $ 900 or more is a good target price.
Ignoring the fact that Apple will have $250B in cash by the end of 2014.
This obviously scares the scaremongers..
AAPL is priced according to what it is worth. No more. No less. Nothing else matters.
Not exactly, it’s priced according to what the seller is willing to accept and the buyer willing to pay. I have made a great deal of money buying things which were worth more than they were priced, and selling things for a more than they were worth.
At this time I’d be glad if it would hit 700+. After Q1-presentation it will climb at MOST 100 bucks, though I suspect it will fall, no matter what! And if it gains a 100 then what? I think we will see a very slow ascent and maybe reach 700 again at this years end?
WS has decided that Gubble/Bubble, Amazin and the likes are to be the darlings, sheesh. Inflated POS!
Prediction: Apple will come up with another small item that iPhone, iPad and MB Air & MB Pro users can’t be without, so the phone can stay in your pocket or bag. We shouldn’t have to grab the phone to make or receive a call or see an announcement or text message. If it has Siri, we should be able to easily say “Home at 6pm.” to reply to a text message.
That new Apple product will make the $s roll in even deeper with Apple spiking up over $750/share and then more than half the analysts will again say “But can Apple keep this up?”
Buy companies who know how to implement innovations on the dips. Stay away from cheap knockoff companies.
Would it be good if apple started buying up its shares and one day became private?
Good for who? Long term that won’t do anything for the price, but it would sure would divest the company of a whole lotta cash. Better to just pay better dividends.
Actually Apple’s share price is already more then $1,000 if consideration is taken for such situation: Apple has 2.8 times more shares than Google. If Apple were to consolidate its shares, its share price would come to $1,470.
Too much paper on the market is actually harmful to Apple to some extent. It is harder to control the extent of manipulation of Wall Street. Apple does not actually need Wall Street’s money as it already has a hugh cash hoard. It’s only for companies that have not enough cash to expand that really need Wall Street’s money. So the less shares in circulation the better it is for Apple in the long run. It needs not worry about the dazzling fluctuation of its shares on the market as this takes a lot of distraction out of the equation. Furthermore Apple needs not have to spend a single cent on share buybacks!
Of course, this would be anathema to many who want to own a small part in Apple’s success. Just a suggestion for Apple to chew on.
right on the money. a reverse split and let
the market settle the price with respect to PE
More and more analysts agree with my assessment that Wall Street has Apple in its rear view mirror as a result of the explosion of competing gadgets that have proven people don’t care very much about quality – they want pizzazz, pop culture, and features they don’t need or use but can’t wait to get their hands on. Apple’s plans to compete in this frenzy are too late and too little. Too bad, really. But it is what it is. AAPL won’t see $700 again until the company has a new CEO and a strategy to get back into the game.
If $AAPL split by 1/10, P/E will jump to 15 ~ 16 for sure. That would
Be equivalent current share of $750. Is that simple?
splitting doesn’ t add value or increase market cap but cheaper shares does allow more buyers in.
Many people simply won’t buy apple shares at hundreds of dollars a pop (it’s psychology but that’s what people are)
Aapl It’s already so large it needs lot more investors if it is to grow.
right now the vast bulk of apple shares is held by funds:
— Private Hedge funds owned by rich people . Funds which often manipulate the stock. These are traders who don’t give a rat azz about apple’s long term prospects but making money from short dip and rises.
— Mutual and Pension funds etc. where apple is placed in a fund with other stocks (a ‘basket’). Would you buy apple in a fund mixed with Dell, Nokia, Rim, Msft, etc with Apple at 2.5% of the fund (like the ‘Tech Fund’ from my local bank) ?
If apple grows the fund has to SELL aapl to ‘rebalance’ the books because by banking rules the fund can only hold a max percentage for each company. Funds selling aapl at end of last year for rebalancing was a component of aapl falling last year. Worse bad performance by Rim, Nokia etc causes the funds to perform badly making investors sell pulling apple along (few people elect to buy ‘Tech’ funds today because of the Rims, Nokias etc)
Aapl need more small long term investors and a stock split will help this. Lots of people I think will buy a few shares of apple a month if it was a 100 bucks or so.
can’t agree more!, but Tim Cook rejected the idea during last conference call saying ” it’s not in best interest of shareholders”
In other hand, $AAPL is so heavy on SPX that it distort the tech sector as whole. wondering if SEC will force AAPL to split, in order to balance the tech index
Has the SEC made the Oracle of Omaha split anything? No.
But, that gigantic stock is not in the index
Wall Street is stuck in their law of big numbers philosophy. Thats not going to change. If AAPL is going to hit 1000 its going to have to do it with a 10 PE ratio.