Zaky: Apple’s P/E Ratio at lowest level since financial crisis despite 92% earnings growth

“While Apple’s (AAPL) revenue and earnings have absolutely skyrocketed over the past few quarters — it reported 92% growth in its recently ended fiscal Q2 alone –its stock price has barely advanced since reaching $320 in late October,” Andy Zaky writes for Seeking Alpha. “Yesterday, the stock closed at $346.57, or 8.6% higher than where it was trading at over 7 months ago.”

“The NASDAQ-100 (QQQ), by contrast, has rallied 18.22% over the same time period. The stock hasn’t even been able to outperform the NASDAQ-100 despite trading at the cheapest relative valuation of the group and posting almost the highest net income growth rate surpassed by only a handful of stocks with lofty valuations,” Zaky writes. “Even the broader S&P 500 (SPY) has outperformed Apple since October, posting 16.2% gains in the period.”

Zaky writes, “Apple’s stock price has simply been unable to keep pace with its explosive 90% growth in earnings. As a result, Apple’s P/E ratio has gradually fallen over the past year to the point that the stock is now trading at the lowest valuation we’ve seen since the depths of the financial crisis — the stock currently trades at a mere 16.5 trailing P/E ratio.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Andy Zaky” for the heads up.]


  1. The Apple valuation fiasco has really gotten beyond the point of being absurd. Andy Zaky and Philip Elmer-Dewitt have done a good job the past few days illustrating the dilemma Apple faces and how investors are just being hung out to dangle in the wind.

    1. Precisely. I would have also harped on it, and shared the bandwagon there with you. Except, I think maybe they DO have a particular acquisition in mind, or are concerned for a strategic imbalance that might threaten them. Right now, their competitors and suppliers cannot afford to invoke Apple’s ire in concert, because Apple can pretty much outbid them in matter of 2-3 quarters. Move much of their supply channels somewhere in the Amazons, Mexico or Malaysia.

      That horde is helping Apple. Time has proven over and over that they are a competent bunch, and wouldn’t just keep their cash pile earning peanuts for nothing.

      Even if it’s a bluff, its’ a very effective one. As a long time stockholder since 1999, I’ll give them a sound benefit of doubt.

    2. 1. imho, lower prices lead to more manipulation.

      2. stock buybacks and dividends don’t guarantee a higher pps, but they do guarantee that Apple will have less money for strategic investments like pre-payments, r+d, marketing, talent, capex, etc.

  2. Great article that clearly describes what we have said for a long time.
    My bet is that the market is manipulating the stock by creating ups and downs that they cash in on. Apple is such a safe bet that the brokers are using the stock with no worries of losing money.

  3. This is especially true, because Apple’s “cash” is equal to about 20% of its total market cap. Every AAPL investor “owns” a portion of that cash. That means Apple’s ongoing business is actually valued at about 80% of its current share price.

  4. Andy Zaky’s article makes logical sense, but the stock market doesn’t rise and fall on logic. It rises and falls on emotion, on manipulation, on the strength of the U.S. Dollar, on the economy as a whole, and many other issues as well.

    Praying & hoping & wishing that the stock market will finally come to its senses about Apple is a fruitless exercise, because the stock market will NEVER fully appreciate Apple’s value. I would say that we would be lucky to see Apple ever rise again until 10 years from now.

    Why? Because everything in the entire stock market is on its way down. With the collapse of the U.S. Dollar coming in the next 3-4 years, along with the collapse of the U.S. Government Debt bubble as well, we haven’t even BEGUN to see a recession or a a depression yet. We haven’t even come close to rock bottom in our economy.

    So when everything in our entire world starts going south in just a few years, ALL STOCKS ON THE STOCK MARKET — including excellent companies like Apple — are going to head straight towards zero on the stock market. Oh sure, they’ll pick up again in 8-10 years after that, but everything is on its way DOWN DOWN DOWN right now.

    I would say that now is the time to sell Apple stock while it’s on its way down, instead of wishing & hoping & praying that somebody out there is going to come to their senses about this stock.

    This is all meticulously explained in the book “Aftershock”, which is an excellent read for any investors out there.

    1. When I read you comments my immediate thought was what broker firm do you work for?
      The way the manipulation works is that comments like this are quoted, spread around and finally made to appear like gospel. We see plenty of comments either in blogs or broker reports making stuff up like that.
      The market always claims that it is driven by emotion but my guess is that is just a smokescreen for the manipulation that goes on a daily basis.
      Despite all the negative press Apple is up 6 fold since I last bought in around 2004. There are not many stocks that can boast that. The ones that can have high P/E such as Amazon and Netflix.
      So I apologize and state that I will not sell any aapl based on your FUD. If I feel that the stock is being overvalued then I will indeed sell the stock but Apple would have to start misfiring on many fronts to get to that position.

    2. You may be right. MacBill. However, in the event of that kind of apocalyptic crash, I doubt that capital preservation will help very much. Electrons in bank accounts or even paper money isn’t worth anything unless someone else thinks it is…

      If things go down that hard, then everyone loses big.

    1. I wouldn’t be so quick to dismiss what MacBill said. maybe the way he wrote it sounds alarmist and hysterical, but the next 5 years are going to be rough. The dollar IS losing value. The US debt is spiraling out of control. Our elected leaders refuse to take action, partially because they are influenced by corporate interests like banks and the defense industry, and partially because no congressman wants to cut government funding for their districts because it means lost jobs.

      1. The dollar is losing value ON PURPOSE! US debt is NOT spiraling out of control. It’s within the normal range as a percent of GDP. This is NOT the time to be balancing the budget, when Macbill is saying we are on the precipice of falling back into a recession. This is just NONSENSICAL.

        You balance the budget and run a surplus in the good years. You run a deficit and try to keep the economy going in the bad years. Balancing the budget when the economic recovery is shaky is idiotic. Obama and Bernanke are wimping out to the Republicans. I believe in lower taxes and smaller gov’t, but this is NOT the time to be balancing the budget.

  5. AAPL would be moving better if

    1) investors better understood the smartphone and tablet market space – the whole framing of AAPL versus Android growth ignores a business school basic – WIDGETS – as in how many WIDGETS DID YOU SELL? not how many iOS.clones did you give away free, A**Clown?

    2) the psychological barrier of the AAPL share price being akin to the GOOG share price, which has always been triple digits and has never really gone anywhere compared to AAPL, and the sheer price is dampening long term individual investors’ appetite for AAPL. The more fluid short term shares, the easier to manipulate the stock.

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