“Despite earnings and revenues growing over 100% and 80% respectively, Apple receives a 15 PE multiple,” Stephen Rosenman writes for Seeking Alpha.
“Apple grew its revenue and earnings faster than the stocks trading at much higher valuations, including Salesforce.com (CRM) trading at a PE of over 600,” Rosenman writes. “I screened tech stocks trading between a PE of 13 and 16, market caps over $10 billion and came up with Nokia (NOK), Yahoo (YHOO), IBM (IBM), Cisco (CSCO) and Ericsson (ERIC).”
• Nokia has been smashed by the iPhone and Android. Yet, it’s in hailing distance of Apple’s PE. You can argue that its pricing makes sense on P/S and P/CF. (Hey, you can argue anything.) Moreover, Its dividend yield is a red flag.
• Crazy as it seems, Yahoo is actually valued more highly than Apple in terms of PE and Price to Cash Flow.
• Ericsson is a lumbering large tech name.
• IBM and CSCO are not far off Apple’s valuation.
Read more in the full article here.
[Thanks to MacDailyNews Reader “Joe Architect” for the heads up.]
The answer is no. The market it not pricing AAPL correctly. It has a ridiculously low PE for such a high current and future growth rate. It is just a matter of time before the market recognizes this and the stock will be much higher in the future. AAPL is one the the best stock buys now with very little downside and huge upside.
Compare with stock like Amazon (No doubt it’s well managed company) but AAPL should be atleast 20 to 25 PE.. Now they must have atleast 82B cach (76 when last reported) If you deduct cash per share then OMG its a bargain.
Apple is a $1000 stock.
I have 600 units of AAPL for sale to you at $1000. Will you pay?
The market is what we are willing to pay. Either pay me or shut up.
Actually, the Constitution’s 1st Amendment allows breeze to say that AAPL is a $1000 without paying you.
Perhaps it would be easier for you to connect the dots if breeze had said “I believe Apple stock will someday sell for $1000 per share.”
Finally, Robert, very few investors say they have 600 “units” of stock. Most of us say “shares.”
Holding since1995, Johnny come lately…
Sounds like an arbitrage opportunity to me.
IBM and CSCO just aren’t growing like AAPL.
If you factor in the reliable growth we’re seeing, plus the headroom left in all of Apple’s key markets, plus Apple’s proven ability to create totally new markets, Apple should be at least 2-3 times higher.
If Apple used some of those Billions to buy make stock, the stock would go through the roof. It’s only a matter of time. It’s obvious now that the concern over Steve Jobs was already priced into the stock. Now I think people are waiting to see what the iPhone 5/iPad 3 are going to bring and if the rumor that Apple is heading to TV’s is true. I will say that as nice as iOS 5 is, it’s not a huge leap from iOS 4. Most of the big features are just reimagining of old features and Apple branded features that you could get from the app store for .99. I’m hoping iOS 6 brings bigger improvements.
You forgot iCloud and the new product pipeline.
And China and Xmas and…
I love it when people speculating about Apple’s stock price completely ignore the market at large. As if Europe isn’t teetering on the edge of fiscal disaster and the US isn’t about to head into another recession.
AAPL is not priced in a vacuum.
True. But he was talking about relative valuation, so those same conditions should be effecting the other companies in the same way. Why then does Salesforce.com get a PE of 600ish and why do Yahoo!, IBM, etc seem like even bets in any economy as compared to Apple?
AAPL stock is Not price right!!!
Conservatively, AAPL will be:
2011 = $422
2012 = $523
2013 = $624
2014 = $725
2015 = $828 🙂
Yes, the market is pricing AAPL correctly. (Well, for this point in time.)
I do not see how there can be a correct price for a fast growing tech company that is too big to be purchased by another company and does not pay a dividend. Where is the pay off? If someone buys APPL they must figure they will be able to sell later to someone who thinks it will continue going up for no particular reason; i.e. no dividend and no selling of the shares in a takeover. It makes no sense.