APPLE to be the Most VALUABLE Company in the world

[famousringo]

Rath said:

famousringo said:

Rath said:
Apple are overvalued. They have without a doubt done very well for themselves but they rely on loyalty to a brand and that is something that usually doesn't last forever.

Actually, Apple is undervalued. Their price to earnings ratio keeps falling and falling, even while they maintain growth of 50-100% year after year.

http://tech.fortune.cnn.com/2011/08/09/apple-is-cheaper-at-353-21-than-it-was-at-78-20/

http://www.asymco.com/2011/07/25/apples-share-price-adjusted-for-earnings-and-growth-reaches-new-low/

Current P/E: about 14

Pre- iPhone P/E: about 30

The disparity gets worse if you exclude the value of Apple's cash pile.

Excuses are made about Steve Jobs' health and the threat of Android, but the real reason for the undervaluation is that Apple is growing so fast and making so much money that the market can't even believe it.

Apple doesn't match any of the other major companies in revenue, operating income, assets. It's P/E ratio isn't spectacular comparatively either.

http://ycharts.com/companies/AAPL/pe_ratio#zoom=10&compCos=MSFT,XOM

Apples in a bubble - it's price is high because investors are speculating that the price will go higher on the release of a new product. Once something happens that causes investors to lose confidence I reckon that the price will plummet down to a more reasonable value for it's assets and income.

Right. That's what I just said. The better Apple performs, the worse its P/E ratio gets. Does that sound like normal market behavior to you?

In theory, expected future growth is supposed to be priced into the value of a stock. Just like the market, you're pretending that Apple is treading water, and not growing geometrically.

http://ycharts.com/companies/AAPL/net_income#zoom=10&compCos=MSFT,XOM

http://ycharts.com/companies/AAPL/eps#zoom=10&compCos=MSFT,XOM

For the past four years, Apple's net income has risen an average of 67% per year. You call it a bubble, but that growth is based on real consumers spending real dollars, not speculators. Your assertion that Apple isn't in the league of Microsoft and Exxon is wrong. Apple is already earning much more revenue and profit (64% and 25% more, respectively) than Microsoft, and at this pace, should overtake Exxon in quarterly profit sometime next year.