“Apple (AAPL), the world’s largest high-tech company, has a remarkable growth record. In the last 5 years the company was able to boost its earnings by a whopping 60.03% annually. In 2006, EPS was $2.27, whereas the ttm [trailing twelve month] EPS is $20.99,” Dr. Osman Gulseven writes for Seeking Alpha.
“As of June 9 close, the stock was trading at $331.49 with a ttm P/E ratio of 15.8, and forward P/E ratio of 11.5. Wall Street has diversified opinions on Apple’s future. The bottom line is 7.2% growth, where the top line annualized growth estimate is 34.1%. Average five year growth forecast estimate is 17.2%,” Gulseven writes. “What is the fair value of Apple given the forecast estimates? Let’s calculate it together using discounted earnings plus equity model.”
Gulseven writes, “According to my 5 year discounted earnings model, the fair value estimate for Apple is $430 per share. As of June 9 close, Apple was trading at $331. Apple is undervalued by $100. While I do not expect this gap to be closed by this year, I think Apple will beat the market in the next 5 years.”
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