http://e.businessinsider.com/public/482186
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.
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.
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