“Apple shareholders have been through somewhat of a roller coaster ride over the past few years,” Oliver Pursche writes for TheStreet.
“After a meteoric rise to just over $700 a share (pre-split) in September 2012 — with many analysts at the time forecasting a share price above $800 — investors saw shares tumble to below $400,” Pursche writes. “After introducing a dividend payment, announcing a seven for one stock split, and raising its dividend, Apple shares are at their highest level ever.”
“The trailing price-to-earnings ratio for Apple is about 18, and the consensus estimate is that earnings will grow by 20% in 2015 and more than 30% annually over the next three years,” Pursche writes. “Generally speaking, an earnings growth rate that is greater than the P/E ratio indicates a reasonable or attractive current valuation. This puts the pressure squarely on future earnings, which are being underestimated.”
Read more in the full article here.