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This Chart Is Driving Apple Bulls Crazy (AAPL)

Source: http://www.businessinsider.com/chart-of-the-day-apple-pe-2011-12

Apple’s price to earnings ratio is at a relatively paltry 14 right now, and it’s driving Apple bulls crazy.

The chart below, which shows Apple’s shrinking PE, from Apple analyst Andy Zaky has been passed around for the last week. (At the time Apple’s PE was 13.3.)

What’s wrong with this chart?

Zaky explains: “Now even though Apple’s growth has far and outpaced the growth of Oracle (16.35 P/E), Amazon (96.15 P/E), Google (19.19 P/E), Cisco (15.11), Qualcomm Inc. (20.62), Amgen, Inc (13.53), Comcast (15.11 P/E), IBM (13.95 P/E), Chevron (13.50), Johnson & Johnson (14.94 P/E), Procter & Gamble (15.49 P/E), and AT&T (13.91 P/E), the stock trades at a far lower valuation relative to these top holdings on the NASDAQ-100 and S&P 500. Some of these companies have actually contracted in 2011. Yet, the market values the earnings out of these companies on the order of 4-5 times more in some cases than they value the earnings out of Apple.”

Of course, there’s more than one way to value a stock. If you value it based on trailing free cash flow, it’s arguably priced fairly, says our Henry Blodget.

chart of the day, apple quarterly p/e ratio compression, dec. 7 2011

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Wednesday, December 7th, 2011 news No Comments

Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.

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