It's had a great run. As others have said, on an earnings basis, it is tough to justify its price. Arithmetically, there is huge growth built into the stock price. It needs a breather.
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Apple Shares Drop 5%
- Thread starter CubaTBird
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No no - you can't say Apple stock is worth $7.
Basically in order to support a share price of, say, $50, that means that earnings per share would have to be $3 or $4. Not this year, not next year, but within a few of years. Analyst EPS expectations for Apple in '06 are $1.05 for the current year, and $1.25 next year. So the company's got a ways to go.
But no way you can say that Apple's just worth $7 if it's generating $1.25 a share with an estimated 10% growth a year. It would be worth at least $25 minimum.
Nice to put my $50k MBA to some use.
Basically in order to support a share price of, say, $50, that means that earnings per share would have to be $3 or $4. Not this year, not next year, but within a few of years. Analyst EPS expectations for Apple in '06 are $1.05 for the current year, and $1.25 next year. So the company's got a ways to go.
But no way you can say that Apple's just worth $7 if it's generating $1.25 a share with an estimated 10% growth a year. It would be worth at least $25 minimum.
Nice to put my $50k MBA to some use.
do you guys remember like 9 months ago when we were all making fun of that guy when apples stock was at 26.50 and he was like, you better buy apple stock now because it will shoot through the roof? Then it went up like 3 bucks and he was like, Im telling you, buy it now. Then we were like, shutup, it might go up 2 more bucks, but shut your trap. Then 9 months later, here we are now talking about Apples stock being down 5 percent after it tripled in price initially. I bet that guy is off in Tahiti right now while we're still paying off bills, mortgages, insurance and car notes. Life's just great.
Knowing when to buy is a lot easier than knowing when to sell though. He might hold on to the stock for years and ride it back down to 28 - or maybe he already sold when it hit 35 and he's kicking himself.
tristan said:No no - you can't say Apple stock is worth $7.
Basically in order to support a share price of, say, $50, that means that earnings per share would have to be $3 or $4. Not this year, not next year, but within a few of years. Analyst EPS expectations for Apple in '06 are $1.05 for the current year, and $1.25 next year. So the company's got a ways to go.
But no way you can say that Apple's just worth $7 if it's generating $1.25 a share with an estimated 10% growth a year. It would be worth at least $25 minimum.
Nice to put my $50k MBA to some use.
I didn't say that Apple stock is worth $7. Not by a long shot.
I said STATED NET WORTH is about $7. This is straight off their balance sheet. Before the split liabilities were about $8, assets were $22 ($15 of which is cash and liquid investments). A-L=Net worth. About $14 a share. After a 2 for 1 stock split $7.
I am not even considering future earnings.
Hope I didn't create any confusion earlier. I was not making an attempt to value the stock in my earlier post.
Just putting my B.S. in Business Admin. to use
This stock will do excellently later on in the year. Earnings people, companies are all about earnings.
agentmouthwash said:
I see more ipods all the time and have yet to see anyone with a creative zen micro... keep in mind that yours, like mine, is just one person's experience and doesn't really mean anything in terms of the larger tech market.
Just what we need...
i.e., just what I want, to hopefully make Apple's stock double:
A simultaneous release of
- Dual-core dual-processor 3.2 Ghz G5 PowerMacs with a built-in iPod dock for Pros on the Go (read two lines down)
- Mac OS X Tiger with a $99 upgrade for owners of Panther and a $119 upgrade for owners of Jaguar
- Next-generation iPods with a stylus and mini Mac OS X system--a new PDA for a new Generation
- An ongoing 'Widget of the Week' contest with free Stuff for winners like an iPod Shuffle or one of those missing Firewire cables
I'm having far too much fun here. Someone stop me before I say something unreasonable!
i.e., just what I want, to hopefully make Apple's stock double:
A simultaneous release of
- Dual-core dual-processor 3.2 Ghz G5 PowerMacs with a built-in iPod dock for Pros on the Go (read two lines down)
- Mac OS X Tiger with a $99 upgrade for owners of Panther and a $119 upgrade for owners of Jaguar
- Next-generation iPods with a stylus and mini Mac OS X system--a new PDA for a new Generation
- An ongoing 'Widget of the Week' contest with free Stuff for winners like an iPod Shuffle or one of those missing Firewire cables
I'm having far too much fun here. Someone stop me before I say something unreasonable!
Great, I love MBA's. Calculator geeks. Bet you have a HP12C with Reverse Polish Notation.tristan said:But no way you can say that Apple's just worth $7 if it's generating $1.25 a share with an estimated 10% growth a year. It would be worth at least $25 minimum.
Nice to put my $50k MBA to some use.
So if 10% annual growth (or is that compounded annual) gets $25 per share. What is the implicit growth rate in eps built into the peak price that apple was trading at?
I'd say about 20-25%. For a rough estimate I take the forward P/E and subtract 10. That's not really the formula, but it's close enough. You can make the calc as lazy or as complex as you want.
I don't really look at stocks that way myself. My method is to forecast earnings three years out, and then try to guesstimate a reasonable PE. PE x earnings = stock price. Then I reduce about a third to give me a fair price for today. That tends to steer me to low P/E stocks like insurance, financials, and industrials, and out of tech, which is fine with me.
I don't really look at stocks that way myself. My method is to forecast earnings three years out, and then try to guesstimate a reasonable PE. PE x earnings = stock price. Then I reduce about a third to give me a fair price for today. That tends to steer me to low P/E stocks like insurance, financials, and industrials, and out of tech, which is fine with me.