“How can Apple (AAPL), with $110 billion in the bank, annual sales of $140 billion and earnings that nearly double every year, be valued so much lower than Amazon (AMZN), which has $6 billion in the bank, sales of $50 billion and earnings that fell 35% last quarter?” Philip Elmer-DeWitt asks for Fortune.
“As of Friday, Amazon was selling for 184 times earnings and Apple for 13.8, a 13-to-1 gap that grew even wider in Monday’s trading,” P.E.D. reports. “This is a question that reader Jeff Forsberg has been asking for nearly a year… ‘This is getting hard to understand,’ Forsberg writes. ‘It’s almost as if Wall Street is pricing Amazon on the basis of Apple’s earnings performance. There’s more upside with Apple’s median price target than Amazon’s, and yet Apple’s P/E’s is compressed to a level that strains credibility. By comparison, there’s hardly any coil left in Amazon’s spring. What gives?'”
Check out the excellent chart in the full article here.
MacDailyNews Take: Compression.
[Thanks to MacDailyNews Reader “David E.” for the heads up.]
The market currently values Apple’s earnings growth at $0.00 – May 7, 2012
Amazon’s Kindle Fire shipments fizzle to anemic 4% market share – May 4, 2012
Target to stop selling Amazon’s Kindle, outfit stores with special Apple iPad displays – May 2, 2012