APPLE to be the Most VALUABLE Company in the world

[Ail]

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.

Sure if you use P/E earnings ratio Apple is undervalued.

The thing with P/E is that originally it was designed as a metric to measure the value of a stock in terms of how long it would take you to recoup your investment,

The problem with Apple is that they return none of those colossal earnings to their stock holders, so I'm not sure we should be using P/E to measure the real valuation of those kind of companies...

I would agree you have to include the cash pile in the valuation too but once again most people doing so get the maths wrong as they value 1$ of cash in Apple's hand as 1$ of cash available to stock holder and that's incorrect as if Apple was to return that cash, for example as a big dividend like Microsoft did several years ago, taxes would kick in and it would be closer to something like 1$ on Apple's book is like 75 cents in the investors hands.......