David Trainer: Apple shares are worth $240

“David Trainer, president of New Constructs, a Nashville-based research firm, says that Apple Inc.’s level of profitability is not sustainable, and that the company’s return on invested capital suggests that the price of the stock should be somewhere around $240. That would be nearly a 50% decline from current levels,” Chuck Jaffe reports for MarketWatch.

“Appearing on the ‘Danger Zone’ segment of MoneyLife with Chuck Jaffe, Trainer – who prefaced his remarks by noting that Apple is great company and that he and his firm are dedicated users of its products – said that the company has had ‘extraordinarily high returns on invested capital,'” Jaffe reports. “Trainer said that if the company can maintain a 75% return on invested capital, ‘the stock’s worth about 295 bucks. If the return on invested capital drops closer to 50, the stock’s worth closer to 240 bucks, and I think that’s where it ought to be, or where it’s going to go eventually.'”

Jaffe reports, “Trainer, whose firm rates securities on a scale from very attractive to very dangerous, noted that Apple’s tremendous profitability keeps it with a ‘neutral’ rating, noting that ‘Apple looks really cheap – and this is where people are getting caught up – if you look through the rear-view mirror to where profits have been… but you have to realize they are on the back side of the mountain.'”

Read more in the full article here.

44 Comments

    1. $194,743,000,000 Reported March 2013 Total Assets
      937,650,000 Shares

      $207.69/share

      Apple would go private or someone would take over Apple using Apple’s own assets. This guy is a professional village idiot. I hope Samsung paid him well.

      1. The only way you get 75% Return on Capital is if you are highly leveraged. But then with all that debt comes increased overhead (debt service), which increases risk.

        Using the rate of return of a highly leveraged firm to value a firm like Apple (you all know what its balance sheet looks like) isn’t disingenuous, its down right deceitful.

      2. I’m just wondering if he was born stupid or just studied real hard. And, like clockwork, the parrots on CNBC this morning (Wed 10:00 am) are parroting the daily gloom and doom call, which just happens to concide with another daily slump in the stock’s price.

    2. Absolutely. “David Trainer, (head idiot) says that Apple Inc.’s level of profitability is not sustainable,”

      Yes cause you know, “Apple cannot just build a cell phone… They are not just going to walk in there and make a good phone…”
      I have to wonder just where these idiots would place Amazon stock value. Must be over 1000$ cause you know, they sell billions and only make 100 million profit…. so they must be worth so much more…

      Right???

  1. just recently, the number of short sales of AAPL shares has doubled to 41 million (1 year ago it was only 10m, all according to yahoo finance). Then, the share price increased from $390 to 450. So, there is a lot of fear of a short squeeze. That’s why there’s a new “need” for bad news on Apple… a sign to buy.

  2. He sees the lower profits on the iPad section and he thinks all products will have lower profits. High end computers will not get cheaper overnight. iPhones will not suddenly become cheap, plastic feature phones. iPods will not be BOGOed.

    On top of everything else, he completely ignores the inevitable paradigm shifting new products in Apple’s pipeline.

  3. I disagree with his view but think Apple has- long term- jumped the shark with Tim Cook & Company.

    Steve Jobs left this earth with an Apple that was a money machine, debt free and growing like no other large company. Cook has fiddled around and pissed away money, time and mindshare while dong ridiculous shit like meeting chief Washington obstructionist John Boehner (pronounced BONER).

    Now Apple will shortly have given away enough money to wire North America with Fiber a couple of times over through dividends and borrowed even more to join the ranks of tax dodgers General Electric and ExxonMobil that are only American when it is to their advantage. It is no longer about making the best stuff to change the world- it is about shuffling paper for Wall Street.

    1. Wrong. People are just freaking worried about the seeming lull in new product releases. Just happened to be bad timing; the releases will come and everyone will drop this Apple-is-doomed mentality once again.

        1. “they will not have a truckload of money again”

          Cook is planning on 60 b buyback and 40 b dividend spread out to 2015
          Apple makes 40 b + a year in profits.
          So even with the buybacks it looks like the cash pile will hardly shrink.

          also every share they buyback they save giving dividends on those shares.

    2. Sadly it has been that for some years. They have been so successful that they have been turning into a more conservative hold on to what you have company well before SJ left the scene. It’s inevitable lets hope there are still some spurts to come to break that trend.

        1. Yes they will. But remember how all the anal…. yst said that Apple was Doomed cause they had do debt…. The were not normal.

          Now that Apple will have VERY Manageable debt, they may even get more upside to its stocks…. Cause that is how stupid the anal…..yst are.

          Just a thought. These guys just cannot think beyond Walmart.

    3. If you own shares, you will get dividends. The company is owned by the shareholders. I think dividends are great.

      Bonds were done because they are CHEAPER than bringing the money back to the U.S. and being doubly-taxed on it.

  4. Setting aside the asinine blethering of yet-another Apple illiterate analcyst:

    Let’s apply this same dumbass reasoning to GOOGLE please!!! What does that make their stock worth? $100? Less? How would that be as an historic PLUMMET in stock price?

    Or how about AMAZON, the perennially over-hyped and over-price tech stock?

    Or how about kicking Facebook’s stock value in the groin one-more-time?

    All of the above have vaporous futures compared to the long, solid future of Apple. But you’d have to actually STUDY and RESEARCH Apple to know that. Have you considered actually performing some WORK, dopey analcysts? It won’t kill you. I promise.

  5. Unless the management of AAPL are as brain dead as he is, then Trainer is in need of rehabilitation training. The short sellers and doomsayers are trying their best to overcome what will be an inexorable march upwards in AAPL stock for a long time into the future from now on.

    1. Eventually the con-artist has to move on after everyone figures out how they got hoodwinked.

      So who will be the next stock market victim of these parasitic vultures? Please make it Google. Please! Please! Please! 😆

  6. The motherfuckers make AAPL drop like 1 google = two AAPL .
    Fuck you assholes !!!! I have big dollars to support Apple !!! Dare u keep pushing it down !!!

      1. @Tflint
        “Are all Apple users as crude and disgusting as you?”

        Not by a long shot. But there are a group of them here whose English seems to have frozen at about grade 8 and whose expression is confined to name-calling and swearing.

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