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Apple Stock Split Coming?

mashny said:
The P/E ratio isn't detached from the price of a share: it is derived from the price of a share divided by earnings per share.
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And when you set up that equation what gets canceled out?

All that matters for the P/E ratio is the total market cap (the "P") and the total company earnings (the "E")...the (Price per Share)/(Earnings per Share) equation is simply an easy way to arrive at the number using widely-available value (share price and EPS) to simplify the math.
 
I know what you're saying, and understand that P/E and market cap are two sides of the same coin. I suppose I'm reaching the same conclusion by looking at the P/E side instead of the market cap side. I've seen too many analysts make shortsighted or biased predictions and assessments of a stocks behavior and future performance by going off on some tangent and how it affects P/E, (and hence, market cap)... But while market cap is a static number, or a result of sorts, P/E give an idea of whether a stock is "overvalued" or "undervalued" by comparing a company's rate of growth to it's stock price; it is this ratio that "helps" analysts determine their rating.
 
mashny said:
But while market cap is a static number, or a result of sorts, P/E give an idea of whether a stock is "overvalued" or "undervalued" by comparing a company's rate of growth to it's stock price; it is this ratio that "helps" analysts determine their rating.
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If a stock splits 2-for-1, both the "price per share" and the "earnings per share" are cut in half, and therefore the P/E remains exactly the same. That's what IJ Reilly meant when he said that the P/E ratio is "completely detached from the price of a share." You can change the number of shares to whatever you want at a given market cap (which is what splits do). But the key is that because EPS is affected in exactly the same way, the P/E ratio doesn't care a whit what the share price actually is.
 
WildCowboy said:
If a stock splits 2-for-1, both the "price per share" and the "earnings per share" are cut in half, and therefore the P/E remains exactly the same. That's what IJ Reilly meant when he said that the P/E ratio is "completely detached from the price of a share." You can change the number of shares to whatever you want at a given market cap (which is what splits do). But the key is that because EPS is affected in exactly the same way, the P/E ratio doesn't care a whit what the share price actually is.
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Thanks. Check my math here, but I think it's not even necessary to consider the number of shares outstanding or EPS to calculate the P/E ratio. All you really need to know is the company's market cap and gross earnings. The same ratio, no?
 
IJ Reilly said:
Thanks. Check my math here, but I think it's not even necessary to consider the number of shares outstanding or EPS to calculate the P/E ratio. All you really need to know is the company's market cap and gross earnings. The same ratio, no?
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That is correct. The definition of P/E ratio usually includes the share-based quantities partly because that data is so easy to come by...share price is everywhere and EPS is in the earnings releases.

Gross earnings are also in the earnings release and market cap is easily obtainable on any financial web site, so that's also an easy way to do it here in the information age. (Of course the P/E ratio itself is easily obtainable on any financial web site as well.)

I think one of the primary reasons the share-based quantities are still used is that the math is easier. You've often got share prices in the $10-$100 range and EPS in the $0-$2 range, so you can do the math easily in your head. It's easier to get screwed up if you try to do the math with numbers in the millions and billions.
 
It should be any day now if it is going to happen. We are sitting at over a 100 for almost a week now.
 
Hi Gang,

Thanks for the informative thread, but it's all still pretty Greek to me. After reading all this, can I ask someone out there (way smarter than me, lol!), if you had an extra 10K - 12K, would you spend it on AAPL tomorrow? I'm not holding you to any investment advice, I just want to know if you think it's still a great time to buy. Thanks a bunch...

shuffle1
 
shuffle1 said:
Hi Gang,

Thanks for the informative thread, but it's all still pretty Greek to me. After reading all this, can I ask someone out there (way smarter than me, lol!), if you had an extra 10K - 12K, would you spend it on AAPL tomorrow? I'm not holding you to any investment advice, I just want to know if you think it's still a great time to buy. Thanks a bunch...

shuffle1
Click to expand...

AAPL has climbed to a peak very recently. In my opinion (and as a 100k+ shareholder) I wouldn't buy -- wait for a correction down in the $98-102 range. I think that will happen soon. The summer is usually a crappy time for all stocks, but you never know!
 
per CNBC.com:

"One of the more interesting exchanges occurred when one shareholder asked how Apple determined whether it would split the stock, a big issue as shares trade north of $100 and at an all-time high. Jobs pointed to the examples of Berkshire-Hathaway and Google as the arguments against a stock split. (Google's Eric Schmidt sits on Apple's board). That exchange led Piper Jaffray's Gene Munster to tell me that a split now appears less likely. Earlier in the day, he had told me a split would happen with 90% certainty."
 
GamecockMac said:
per CNBC.com:

"One of the more interesting exchanges occurred when one shareholder asked how Apple determined whether it would split the stock, a big issue as shares trade north of $100 and at an all-time high. Jobs pointed to the examples of Berkshire-Hathaway and Google as the arguments against a stock split. (Google's Eric Schmidt sits on Apple's board). That exchange led Piper Jaffray's Gene Munster to tell me that a split now appears less likely. Earlier in the day, he had told me a split would happen with 90% certainty."
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Not that it really matters one way or another, but I read this response as "we'll tell you when we tell you, but not before."
 
ya i'm also pondering these days whether the current price (approx 108) is good to buy... i mean, it's definitely a GREAT buy in the long run... i'm just thinking whether the 108 will come down a bit (ie. whether we're on a temporary peak as one mentioned and when an adjustment would happen if it does).... what a toughie.
 
As a person that's owned different long-term stocks for periods of 1-5 years for the last 15 years, let me just say....

.....this thread is hilarious.
 
it looks as if apple wants to go the google route the more i hear about it. i thought they would split, as they did when the stock hit $80 two years ago. i guess they want to shoot for $400 a share, like google, though. i really wouldn't mind. i invested $800 in the apple and if it did reach google heights, i wouldn't complain.
 
Grimace said:
AAPL has climbed to a peak very recently. In my opinion (and as a 100k+ shareholder) I wouldn't buy -- wait for a correction down in the $98-102 range.
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I'm a shareholder as well (though not near as much as Grimace!) and wouldn't buy now either. I'm actually debating selling some, as it's now priced close to 40x earnings. Of course, everything depends on how earnings change. If the iPhone is a huge hit, you could have an iPod-like effect where earnings are grown substantially, which would lower the P/E ratio and make it more attractive. We shall see.
 
tveric said:
As a person that's owned different long-term stocks for periods of 1-5 years for the last 15 years, let me just say....

.....this thread is hilarious.
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Damn...now I can be cryptic at times...but this is downright awful...would you care to mention something that is actually informational besides tooting your own horn for being
"a person that's owned different long-term stocks for periods of 1-5 years for the last 15 years"

:rolleyes:

that's my rant for the day.

That being said, I wouldn't wait for a split that could be a while in coming. If you truly like the stock as a buy then buy. If it splits and goes up you're really still in the same place in the grand scheeme of things. I can attest that i'm continuing to buy, but not just on blind faith of course.

ObsidianIce
 
tveric said:
As a person that's owned different long-term stocks for periods of 1-5 years for the last 15 years, let me just say....

.....this thread is hilarious.
Click to expand...

As a person who has met all kinds of interesting and accomplished people over the last 40 years, let me just say....

.....I am absolutely impressed with you... :rolleyes: I find you much more hilarious than this thread. Please keep entertaining us... please!
 
<ignorance>

Sorry for sounding dumb, but assuming there was a split (or even if there isn't, ftm), how does one go about buying shares in Apple? :confused:

Is there a minimum purchase? Finally I have a little money available (though not much) so investing it seems like a a good idea...

Again, please excuse me if this post sounds stupid :eek:

</ignorance>
 
To start, you need a brokerage account. Not sure which ones you have available to you in the UK. The truth is though, if you need to ask, you're probably better advised to stay clear of the stock market. It can be a hellish place even for those of us who've been investing for decades.
 
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