Despite enormous profits, staggering growth, record sales and all-time highs, Apple stock still massively undervalued

“Apple is worth $415 billion, putting it neck and neck with Exxon Mobil as the world’s most valuable company. But by standard Wall Street measures, its stock is a bargain,” Peter Svensson reports for The Associated Press. “Why aren’t investors giving the company full credit for its enormous profits and staggering growth?”

“There’s a big discrepancy between Apple’s earnings and its stock price, and it became even more glaring on Tuesday, when the company reported results for its latest quarter,” Svensson reports. “Apple’s sales were $46.3 billion in the quarter that ended Dec. 31, up 73 percent from a year ago. That’s more than twice the revenue of its old nemesis, Microsoft Corp. Net income grew 118 percent to $13.06 billion. That’s more than Google Inc.’s revenue for the quarter.”

Svensson reports, “Investors cheered -sort of. Apple’s stock rose 6 percent Wednesday, hitting a new all-time high of $454.45. But analysts who do the math find that, based on the earnings expected this year, the stock should be trading much higher. Before the earnings report, 45 Wall Street analysts who follow the company believed, on average, that Apple should be worth about $556 per share. After the report, the analysts rushed to raise their estimates, some as high as $650. That means Apple shares trade at a discount of 25 percent to 50 percent compared to its projected earnings for the coming year.”

“There are two main reasons for the missing hundred-dollar bills in Apple’s stock price,” Svensson reports. “One is Apple’s policy of hoarding the cash it makes, like a dragon resting on a pile of gold. It doesn’t share any with investors through dividends or buybacks, like many other companies do… The other main reason for the low stock price appears to be that Apple has grown so big, so fast. Investors and analysts have refused to believe that a company of that size can grow at an annual rate of 73 percent, like it did in the latest quarter.”

Read more in the full article here.

MacDailyNews Take: Cue the semi-annual, massively overblown, contrived Apple product “issue” with the obligatory “-gate” suffix in 3… 2…

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  1. At least the stock has broken out of its last holding pattern. Trouble is, there’s only so long you can sustain >100% YOY growth, and the stock will probably tank at the first sign Apple is peaking.

  2. the heck with big investors. seems to me that they, who obviously manipulate apple’s share price, should not be rewarded for their manipulation, by granting them dividend profits, which they will promptly gobble up and then immediately resort to their old manipulative ways to extract more.

    better, i think, to have a very large stock split so that people of lesser means – students for example – can afford to actually buy enough stock at a reasonable enough price to benefit from stock valuation rises.

    most students don’t have enough spare cash to pay $446.66 for a single share of apple, but if shares were down to $44.66 per share they could afford to buy a couple or more and continue to add even more over time and let the value rise from there. this would open the stock to a lot more investors

  3. The stock market is the biggest scam ever. When you have nerds manipulating computers and making millions by clicking a mouse button, something has to be wrong. What did these characters do/produce to become filthy rich? Just read ‘Quants’ and you’ll know what I mean.

    1. What do investors do with a click of a mouse? They risk the money they are putting into the market-that’s what! He/ she who does not risk cannot win. So, yes there are profits to be made and savings to be lost if your risk exceeds its proper limits (and good sense). So don’t fault investors who enable corporarations to do research, produce products, and keep many people employed.

  4. Learn to ride the wave. I actually had a sale in yesterday at $460 a small chunk of my stock and it sold in after hours (I guess it was added to a block because I didn’t see it hit $460). No problem, just traded up (or bought at $446 and got 6 more shares for free! God I love Ameritrade.

    When I put the sale order in yesterday morning at $460 I thought that was a pipe dream and it wouldn’t hit but I was wrong. Whahoo!

    Oh, yeah I’m working on my Buffet plan and when I get there and can live off my investments I will gladly pay more then the 15% but until they change the tax laws I won’t be paying one penny more then required. Until then I’m in a much higher tax bracket.

  5. I would personally like to see Apple pull off something like as follows:
    1- Set up as a Virtual Network Operator with all the major ISPs in the US.
    2- To get their full co-coperation loan all of them a truckload of money at 0.01% for a nice intermediate term to build up and build speed up their networks.
    3- In consideration of the loans, Apple gets access to their pipes without throttling and no bandwidth caps to deliver data to your Mac, Apple TV, iPad, iPhone, iPod.
    4- Sell the service to us at a fair price with a decent profit.

    Unless someone gains a pass around the ISPs IPTV and cloud computing will be more theory than reality.

    Use the cash for networking like they did for Flash Memory- loan the money out to those who can make it happen.

  6. How the hell could a frigging banker that creates nothing possibly understand Apple? I wish Apple would create a bank that did no derivatives, was mobile, had success-oriented research and took the casino factor out of investing! They just have to recommend their own stock. Why are profits up 70+% and the stock price only 31%? Because financial investors and analysts are IDIOTS,

  7. FFS MDN do you have to print this story every bloody week!

    Every week you whine on about Apples’ stock price is too low and undervalued. We know. We get it. That’s the market – it’s called supply and demand. Stock is only worth what the market is willing to pay for it. Live with it or go buy somebody else’s stock and stop boring us all to death with this story over and over and over again.

  8. One is Apple’s policy of hoarding the cash. . . . The other . . . that Apple has grown so big, so fast . . . refused to believe that a company of that size can grow at an annual rate of 73 percent

    The third is that Apple doesn’t play by Fool’s Rules, therefore, penalize them.

    Check out what CREATED and what MAINTAINS our ongoing worldwide economic depression. It’s BAD BIZNIZZ where companies literally self-destruct because they are so greedy, shortsighted, un-inventive and downright idiotic.

    Check out Apple who is none-of-the-above. Therefore, penalize Apple!

    Essentially, this comes down to investing in criminal companies versus being adverse to investing in companies who do it THE RIGHT WAY and GROW as a result, as opposed to DIE, which is what every Fool’s Rules following company is determined to do.

    Watch! This little game of ‘We-The-Fools’ versus ‘We-The-Right’ is played out every single day on the stock market.

    No wonder Apple hoards its cash against attacks of We-The-Fools.

    Apple survives and thrives.

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