Apple: Is the world’s most valuable company actually undervalued?

“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.


  1. AAPL is priced exactly where people will pay for the stock. If you think it should be higher, please buy my stock for 30% over its present value.

    I thought you wouldn’t. You won’t pay any more than you have to and it is the same as everybody else. The stock is priced as it is and get over it. When you personally will pay more for it, it will be worth more.

    1. Hey Stock Lessons, you hit it right on the button. A stock price is never more or less than someone is willing to pay for it, be it a rational or irrational decision. This applies to the stock market or the flea market; it is as simple as that.

      As for Apple, you can throw all those ratios in my face, stating that the stock is undervalued or not, irrelevant. Apple is unique as compared to others where getting a new product to market is a tremendous task and involving enormous financial risks.

      For example, if the iPhone 6 + would have been a flop, the financial loss would be in the billions of dollars, but the ratios would still be nearly the same (iPhone 6 + is just one product out of many, right). What do you think would happen to the stock?

      Investors can call Apple undervalued when all goes well, but it is always prudent to understand that it cannot always be that way. This has to be part of stock price.

      Have a great day!

      1. “A stock price is never more or less than someone is willing to pay for it, be it a rational or irrational decision.”

        Well you should tell Warren Buffet. That crazy guy thinks a stocks price and its value have nothing to do with each other. Poor guy is going to lose his shirt on Wall Street … oh wait.

    2. Only one problem with that argument. You are assuming that no other factors than supply and demand affect stock price.
      Based on what we routine observe for aapl, there are multitudes of rumormongering that send waves of fear through the investment community, and causing sharp drops in the stock for no apparent reason.
      Just last week the stock dropped over $5 due to a one very large sale order and triggered a number of automated sales calls. That type of behavior is not expected in a company that is performing how Apple.
      Clearly the stock has risen $20 buck in recent months primarily because the FUD has stopped. Now the games resume to drop the stock down again. Investors are sucked in to drive the price up and the brokers force it down again to buy back in and repeat the cycle.
      The naivety that no-one is manipulating the stock to their own end is sad. It’s all a big game and those who do own aapl stock for the long term hope that Apple success with drive the stock up on average over time.

  2. The last ten days have over undervalued it and market looks to undervalue it another few percent before a turn. I had my stop order at $112 but called broker at 7 AM and dropped it to $102. Glad I did, I would have been out this afternoon. He thinks $102 is pretty safe. That will be my bottom, not risking another 40% nightmare.

  3. I no longer give a damn when the fools start dumping Apple stock. It makes it easier for me to purchase a few more shares and so much easier for Apple to buy back their own shares. I have no doubt in my mind that Apple stock will be heading higher after earnings are announced. I know that Apple stock will never be worth a premium like Google or Amazon but that’s just how it is. I’ve compared Apple to Microsoft very carefully and I still can’t understand why Microsoft has a higher P/E than Apple. It doesn’t make any sense at all to me. Apple’s inability to increase its institutional ownership is also a puzzle to me.

    If I get really lucky, Apple might just come up with some incredible device where consumers simply can’t resist buying that particular product. No matter. As long as Apple continues to increase those dividends, I’m golden. However, I’ve yet to figure what’s holding Apple’s value down but it must be something fundamental about how the company is perceived by Wall Street. Simply saying they don’t get Apple no longer cuts it. Money is money.

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