“While Apple’s market cap is mind-blowing at nearly a half a billion dollars, they have ample earnings to support it,” Greg Satell writes for Forbes. “What’s more, with average forward P/E ratios for the S&P 500 running somewhere between 14 and 15 (depending on who’s estimating it), the stock looks positively like a steal.”
“With a commanding presence in the fast growing smartphone and tablet categories, why would you pay 50% more for the earnings of an average company than you would for Apple (or some of the other companies on the list for that matter)?” Satell writes. “Moreover, a lot of people (like me, for instance) would find it hard to break away from the Apple ecosystem, which gives them somewhat of a protected consumer base.”
Satell writes, “Apple remains a great company, but the future is always uncertain… They have great challenges ahead and great assets with which to meet them.”
Read more in the full article here.
I don’t really care for Apple’s underlying share valuation. At some point in time sanity will prevail and the shares will resume their inexorable rise.
The vagaries of the stock market is not for the fainthearted, but then again when you’re talking about value investing, you’re talking about a reasonable time frame, not measured by quarterly reports.
The underlying trend for Apple remains growth and that is good thing.
The Wall Street needs to banish the vagrants and thieves.
That would leave it empty of life forms.
🙂
Does sound risky, now that you mention it.
Plus 10. 😀
If you say that the underlying trend for Apple remains growth, then why has the P/E been constantly falling even as the iPhone made spectacular gains in sales. Apple has never shown any growth prospects in the eyes of Wall Street. Even as iPad sales grew tremendously, Apple’s P/E continues to sink.
Nothing since 2008 has reversed that sinking P/E trend. From a P/E high of 42.4 in 2008 to the present crappy P/E of 10.3. Do you see any Apple growth trend indicated in those figures? Apple’s P/E fell off a cliff in 2009 and never recovered. That is the mark of company devoid of any potential growth.
Apparently you’ve missed all the quarterly reports of ACTUAL growth in profits? As have apparently all of the Wall Street analysts and brokerage houses.
This is good to know. For no other company is “the future is always uncertain… They have great challenges ahead and great assets with which to meet them.”
“While Apple’s market cap is mind-blowing at nearly a half a billion dollars…”
Wow. I didn’t realise Apple had dropped that much.
How many Apples is Dell worth now ?
Apple worth 18.59 Dells.
Apple market capital: 429.89B
Dell market capital: 23.12B
Not if Apple were only worth half a billion dollars, as stated in the article and re-posted on MDN.
I was trying to subtly point out the typo, which should have read trillion, but it looks like I was too subtle for some.
I noticed that billion/trillion error, too. That is a major mistake for Forbes. Where are the editors???
Or rather 0,054 apple
“mind-blowing…half a billion dollars” This reminds of of Austin Powers when he wakes up in the future and is off by a factor of 1000. If Apple’s market cap was 0.5 Billion dollars, I would put every penny I have into their stock since they have 200 times that in cash. I’m pretty sure they meant trillion.
How can forward Pe be 14-15 when the current P/E is 10? That would suggest that if the price stays the same that Apple would earn lower profits in the future.
As for Dell – who cares – they are irrelevant now.
Correction he is referring to the forward P/E for the S&P.
Clearly the market is pessimistic since they are quoting a P/E of 9 for Apple. They expect the price to remain roughly the same or earnings to track with price in the same ball park.
It boggles the mind to see that MS has spent so much in R&D and has so little to show for its efforts in comparison. There ought to be a quality quotient involved instead of how much R&D money can be thrown at a wall to see what sticks.
Apple produces products that actually sell. Many markets have hardly been penetrated around the world yet. As long as there is no world (global) war, Apple will prosper.
MS appeals to the market since it has a long term monopoly in PC OS and business suites. They can dabble in other areas as much as they want because of the windows and office cash cow.
Apple’s phone and tablet market are viewed as nascent and the street expect low cost providers to chip away at Apple’s share.
However we have recently seen Apple take back share from Android in the mature markets. This is a trend that will continue as spread across the world as smartphones become the norm.
Apple’s approach is to take the high end market with their quality devices and once established start introducing lower cost devices. This has the effect of increasing market share whilst maintain good margins and squeezing the competitors into the cheap and low margin sector.
What Apple are doing is the opposite of what Compaq, Dell etc have done in the past to gain market share. These companies have become irrelevant because they did not maintain their margins and became easy prey for other competitors.
MS doesn’t spend money on R & D. The money goes to marketing.
Apple should take a small part of it to pump up their R&D in the Apple TV dept. the Wii U looks good but it is not doing so good. I have confidence in Apple that in this area that they can do better than what is out there. They have the “hand controller” in place with the iPhone, iPod Touch, iPad and iPad Mini. All they need to do is to make a iTV and/or work on the ATV to work as a console. Also to talk to developers to make more games or apps to work via AirPlay. There are a couple of games out there like Real Racing 2. With this game, an iOS device and a ATV, it really shows what can really be done with this hardware. Apple is on the cusp of something big and revolutionary. If they put this out there, the content providers will come later. This is what happened with the xBox 360. Apple has the brains and innovations to turn the living room market up side down.
The main serious challenge Apple faces is succeeding against the headwinds of the Obama economy, which literally vilifies success and profit and at the same time promotes insane economic policies of ever increasing government spending, ever increasing debt and regulation. All this stupidity – buying votes with welfare for inner city and the Wall Street Goldman Sachs crowd – destroys the private economy and the jobs of regular people – who are Apple’smarket customers. Apple will succeed unless Obama succeeds in destroying our entire private economy. It is a close race now, with no clear winner.
Kent, there are political blogs where you can vent your moronic screed.
Shouldn’t you be posting on infowars.com or blaze.com? Sheesh.
Michael – there are elementary school or TMZ blogs where you can go and tell people what to do. This post was about Apple’s ridiculous low price. A big part of this is investor concern about the future sales of a consumer products company with the economy in a clear recession/depression. That is the key fact hurting Apple. So, STFU
Apart from Apple a big part o valuations on the stock market are driven by the multiple trillions of imaginary dollars that central banks- not just our Fed- are using to prop up against the massive deflation that happened in 2007-8. They have been inflating the money supply and that money is chasing stocks upward. The whole market.
Because of this, P/Es is not that important. There will be a payday.
Apple sure seems to be filing the patents. Maybe one is the next big thing.
Kent,
Plus 10!