Anyway You Slice It, Apple (AAPL) is Cheap, Cheap, Cheap
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With the latest round of estimates hikes on Apple (Nasdaq: AAPL) - including today's Goldman raise - the FY2012 EPS consensus of the iPhone- and iPad-maker has now moved up to $32.60.
Apple is currently in the fourth quarter of 2011 -- now nearly over (9/25) -- so looking at 2012 estimates are more than appropriate when trying to value the stock.
With the recent surge in the share price, Apple is trading with a P/E of 12.9x. This is essentially inline with the S&P 500 multiple of 13.1x.
So is Apple now fairly priced? The case is easy to make that it's still way too cheap. Here are just three simple examples:
P/E ex-cash: Apple has cash and cash equivalents of $83 per share and growing fast. Backing this out of the current multiple puts the valuation at just 10.3x the FY12 consensus. Some argue this cash could be $130-$150/share by FY13.
EPS "beat" rate: Over the last four quarters, Apple has beaten the consensus by an average of 22 percent, according to data at StreetInsider.com’s EPS Insider. If the company continues on this pace, it will earn $39.77 in FY12. Taking a market multiple on this number returns a stock price of $521.
EPS way too low: Going a step further, Jim Cramer thinks Apple could earn $45 in FY12. Placing a market multiple on this number gets the stock to a possible share price of $589.50.
DISCLOSURE: The author of this report is long Apple.
Apple is currently in the fourth quarter of 2011 -- now nearly over (9/25) -- so looking at 2012 estimates are more than appropriate when trying to value the stock.
With the recent surge in the share price, Apple is trading with a P/E of 12.9x. This is essentially inline with the S&P 500 multiple of 13.1x.
So is Apple now fairly priced? The case is easy to make that it's still way too cheap. Here are just three simple examples:
P/E ex-cash: Apple has cash and cash equivalents of $83 per share and growing fast. Backing this out of the current multiple puts the valuation at just 10.3x the FY12 consensus. Some argue this cash could be $130-$150/share by FY13.
EPS "beat" rate: Over the last four quarters, Apple has beaten the consensus by an average of 22 percent, according to data at StreetInsider.com’s EPS Insider. If the company continues on this pace, it will earn $39.77 in FY12. Taking a market multiple on this number returns a stock price of $521.
EPS way too low: Going a step further, Jim Cramer thinks Apple could earn $45 in FY12. Placing a market multiple on this number gets the stock to a possible share price of $589.50.
DISCLOSURE: The author of this report is long Apple.
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