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Apple profits soar 95% on 18.65M iPhones, 4.69M iPads and 3.76M Macs - Page 3

post #81 of 97
Quote:
Originally Posted by melgross View Post

Of course, what he charted is arbitrary. When that's done, the numbers can show anything. In addition, except for a couple of outliers, the PE now isn't that different from his first numbers. We tend to see trends that don't exist, or that are minor. Humans are built to make connections between things that aren't connected.

The difference between a PE of 18 and 20 is about 20%, or the difference between AAPL trading at $350 or $420. So I'm going to call that significant. Just a couple of years ago, AAPL was routinely trading at multiples between 20 and 24. Those kinds of multiples can easily be justified today, based on EPS growth. We just have to know we're not going to get them anymore, and in reality, the current trend has AAPL trading at multiples in the low teens within a few years at most. So what you've got essentially is a growth company trading near value multiples and trending steadily closer to value multiples.
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post #82 of 97
Quote:
Originally Posted by Dr Millmoss View Post

The difference between a PE of 18 and 20 is about 20%, or the difference between AAPL trading at $350 or $420. So I'm going to call that significant. Just a couple of years ago, AAPL was routinely trading at multiples between 20 and 24. Those kinds of multiples can easily be justified today, based on EPS growth. We just have to know we're not going to get them anymore, and in reality, the current trend has AAPL trading at multiples in the low teens within a few years at most. So what you've got essentially is a growth company trading near value multiples and trending steadily closer to value multiples.

Except that those PE's were selected. In order to know what was really happening, we'd have to see a chart of the entire period. I'm not convinced that PE's will trade in the lower teens for years. If it does, then Apple's growth will be at current MS levels.
post #83 of 97
Quote:
Originally Posted by melgross View Post

Of course, what he charted is arbitrary. When that's done, the numbers can show anything. In addition, except for a couple of outliers, the PE now isn't that different from his first numbers. We tend to see trends that don't exist, or that are minor. Humans are built to make connections between things that aren't connected.

If by arbitrary you mean the sample size only covers a period of 1 1/2 years, then yes. But these p/e numbers aren't randomly selected figures from within that timeframe. Within each quarter represented, the high number and the low number are the absolute peak and trough p/e's for that three month period. I looked at every trading day between October 2009 and today to come up with these numbers. So today's closing price of 350.72 would have to rise 8% just to reach a p/e 0f 18, the absolute lowest number for the entire period from Oct.2009 till today. And Apple would have to rise 20% to return to its average of 20 over that period. Seem like a lot to expect between now and July. I agree with the good Dr Millmoss that Apple seems to be sliding toward value stock territory. There's a good discussion that Horace Dediu opened on his asymco site about Apple 's current valuation. http://www.asymco.com/2011/04/21/is-...rket-discount/
post #84 of 97
Quote:
Originally Posted by melgross View Post

Except that those PE's were selected. In order to know what was really happening, we'd have to see a chart of the entire period. I'm not convinced that PE's will trade in the lower teens for years. If it does, then Apple's growth will be at current MS levels.

I've explored this at Bigcharts.com, the only place I know where you can chart PE in a time series. I don't know how to create a link to a chart I've created, but you can recreate one easily yourself. Click on the advanced chart for AAPL and PE as a lower indicator. You will see that PE had been in the 30s range for some time, until the '08 crash, it declined to around 10, then rose again to around 20 in the last half of '09. Since then it's been declining gradually but steadily, especially after the middle of last year.
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post #85 of 97
Quote:
Originally Posted by joshdean View Post

There's a good discussion that Horace Dediu opened on his asymco site about Apple 's current valuation. http://www.asymco.com/2011/04/21/is-...rket-discount/

Worth reading. Thanks for the referral.
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post #86 of 97
Quote:
Originally Posted by joshdean View Post

If by arbitrary you mean the sample size only covers a period of 1 1/2 years, then yes. But these p/e numbers aren't randomly selected figures from within that timeframe. Within each quarter represented, the high number and the low number are the absolute peak and trough p/e's for that three month period. I looked at every trading day between October 2009 and today to come up with these numbers. So today's closing price of 350.72 would have to rise 8% just to reach a p/e 0f 18, the absolute lowest number for the entire period from Oct.2009 till today. And Apple would have to rise 20% to return to its average of 20 over that period. Seem like a lot to expect between now and July. I agree with the good Dr Millmoss that Apple seems to be sliding toward value stock territory. There's a good discussion that Horace Dediu opened on his asymco site about Apple 's current valuation. http://www.asymco.com/2011/04/21/is-...rket-discount/

I understand. But peaks and troughs don't really matter. It's the average or median values that do. If we see a PE of 15 for a day, does that matter if it's well off the curve? Not really. Same thing for a peak value. I'm not arguing that the value has been moving down a bit, but I don't think that means it's going to remain low. I've seem this Dort of thing happen over the years. It doesn't mean it's permanent. The market's PE has been collapsing a bit for some time. It's understandable, given present economic conditions. But I think that Apple will recover.
post #87 of 97
Quote:
Originally Posted by Dr Millmoss View Post

I've explored this at Bigcharts.com, the only place I know where you can chart PE in a time series. I don't know how to create a link to a chart I've created, but you can recreate one easily yourself. Click on the advanced chart for AAPL and PE as a lower indicator. You will see that PE had been in the 30s range for some time, until the '08 crash, it declined to around 10, then rose again to around 20 in the last half of '09. Since then it's been declining gradually but steadily, especially after the middle of last year.

In the 1990s, Apple's PE was crazily high. I really can't use that as a useful indicator of their value. Apple was a very different company then, and the market was nuts. Every IPO jumped in value, with many crashing shortly thereafter. Greenspan encouraged that, and it ended in a crash. I don't use it as an example of what we should see.
post #88 of 97
Quote:
Originally Posted by Dr Millmoss View Post

Worth reading. Thanks for the referral.

I read the article. But he really isn't serious. It a tongue in cheek thing. I also doubt very seriously that he means that Apple's PE should be 32.

I do agree that it's a good value, and I've been saying that here for a while.
post #89 of 97
Quote:
Originally Posted by melgross View Post

In the 1990s, Apple's PE was crazily high. I really can't use that as a useful indicator of their value. Apple was a very different company then, and the market was nuts. Every IPO jumped in value, with many crashing shortly thereafter. Greenspan encouraged that, and it ended in a crash. I don't use it as an example of what we should see.

I wasn't going back nearly that far to find PEs in the 30s. I was talking 2004-07. The market was pricing AAPL as a big growth story back then, and the market was right -- those multiples were entirely justified based on earnings growth rates. That earnings growth story hasn't ended, but the markets are trading AAPL as if it has, or will soon, especially since the last quarter of '10. You may recall that I got my head handed to me several months ago when I made the observation that AAPL had been underperforming the broader indexes for several months. It's still true, in spades.

Quote:
Originally Posted by melgross View Post

I read the article. But he really isn't serious. It a tongue in cheek thing. I also doubt very seriously that he means that Apple's PE should be 32.

I do agree that it's a good value, and I've been saying that here for a while.

I get the humor aspect, but what he said about the boogyman factor is quite true, I think. For any variety of reasons, the markets have never entirely bought into the Apple story. There's always been an underlying current of disbelief, of predicting its ultimate downfall. This sort of thinking about Apple has persisted for decades, that their success can't be anything more than transitory, a facade that will crumble in any strong breeze.

When you say "good value" I think "value stock." A growth stock trading like a value stock isn't a good value, it's a company leaving huge amounts of shareholder equity on the table.
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post #90 of 97
not clear
whats in a name ? 
beatles
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whats in a name ? 
beatles
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post #91 of 97
Quote:
Originally Posted by melgross View Post

The market's PE has been collapsing a bit for some time. It's understandable, given present economic conditions. But I think that Apple will recover.

According to Robert Shiller's numbers, the S and P's p/e has been rising consistently since March, 2009. As of Thursday , it was 23.63. I do hope you're right about Apple.
http://www.multpl.com/table?f=m
post #92 of 97
Quote:
Originally Posted by Dr Millmoss View Post

I wasn't going back nearly that far to find PEs in the 30s. I was talking 2004-07. The market was pricing AAPL as a big growth story back then, and the market was right -- those multiples were entirely justified based on earnings growth rates. That earnings growth story hasn't ended, but the markets are trading AAPL as if it has, or will soon, especially since the last quarter of '10. You may recall that I got my head handed to me several months ago when I made the observation that AAPL had been underperforming the broader indexes for several months. It's still true, in spades.



I get the humor aspect, but what he said about the boogyman factor is quite true, I think. For any variety of reasons, the markets have never entirely bought into the Apple story. There's always been an underlying current of disbelief, of predicting its ultimate downfall. This sort of thinking about Apple has persisted for decades, that their success can't be anything more than transitory, a facade that will crumble in any strong breeze.

When you say "good value" I think "value stock." A growth stock trading like a value stock isn't a good value, it's a company leaving huge amounts of shareholder equity on the table.

Apple, being almost all a consumer electronics and computer company has been at a disadvantage. Since the recession, in particular, it's been thought of as more vulnerable to the vicissitudes of that consumer market. True or not, that's one thing holding the stock back. When a company grows enough to leave the smaller group that hold the stock, then broader ideas of what is expected from them become more apparent. We see this with Apple.

When Apple was a smaller company, and had what appeared to be more room to grow, and was much more specialized, it was held by those who believed in the company's look at the world. But when it grew so fast that other moved into the stock, along with many more analysts, the expectations changed.

It's true that the stock was fairly briefly in the 30's more recently, but it lived there for a much longer time in the 1990's.

It may be a value stock right now, but it isn't the company leaving the equity on the table, it's the market itself. And as you buy into the idea that whatever the stock is priced at is the true value, then the company is priced correctly according to those lights.

A quote from a previous post of yours here:

Quote:
I'm sure we've discussed this before, but I've never really been on board with the concept of overvalued and undervalued. The market sets value every day, so in reality we are collectively setting the exact value of any stock at any given moment. Looking at it any other way IMO is a formula for driving yourself crazy.
post #93 of 97
Quote:
Originally Posted by brucep View Post

Except aapl has no debt and 77 bn in cash .
and 2 or 5 bn in pre payed component contracts out there .
and a server farm bar none .
aapl is way under priced and the street values GOOG and face book much higher pe with no true backing value or one trick pony type concerns .

aapl does it all and they manage it all very very well
minus off the cash and then compare pe's

for example the ipad2 is still not quite right
but demand is exploding
and japan has slow suppliers .. that back log just got worse ...
this is great news for apple
clients will not sit on the fence . if they see it they will buy quick next time .
and 75 of the 500 fortune companies already will use the iphone ipad2 in their biz setups .

2013 apple will have a small back log
2012 looks 2 to 3 weeks for the yr

peace
9

It's not that simple. By the way, Apple has about $66 billion.
post #94 of 97
Quote:
Originally Posted by joshdean View Post

According to Robert Shiller's numbers, the S and P's p/e has been rising consistently since March, 2009. As of Thursday , it was 23.63. I do hope you're right about Apple.
http://www.multpl.com/table?f=m

That's interesting. I haven't seen his work on this, but the articles I've been reading in the financial sites and rags have been saying the opposite. Why the discrepancy, I don't know.

Ah, well. I looked at the chart after I posted, something I tell others not to do.

Well, really, if you take the recession's depressed numbers out, then you can see that the PE is indeed well down from before. In fact, it hasn't gotten to the point where it was before the recession. What we see here for two years is totally a result of the recession. Look to earlier years going backwards, and you see the PE going higher. If it gets to 24, it will be somewhat lower than it was right before the recession.

That counts as the PE going down, just as I said. Now, if the PE rises above 24.5, then it could be said that it appears to be going higher when compared to the Pre movement downwards. But you can't use 2009 and after numbers to characterize these numbers because of the discontinuity caused by a major dislocation the size of the recent recession, the results of which are still being sorted out.
post #95 of 97
Quote:
Originally Posted by melgross View Post

Apple, being almost all a consumer electronics and computer company has been at a disadvantage. Since the recession, in particular, it's been thought of as more vulnerable to the vicissitudes of that consumer market. True or not, that's one thing holding the stock back. When a company grows enough to leave the smaller group that hold the stock, then broader ideas of what is expected from them become more apparent. We see this with Apple.

When Apple was a smaller company, and had what appeared to be more room to grow, and was much more specialized, it was held by those who believed in the company's look at the world. But when it grew so fast that other moved into the stock, along with many more analysts, the expectations changed.

It's true that the stock was fairly briefly in the 30's more recently, but it lived there for a much longer time in the 1990's.

It may be a value stock right now, but it isn't the company leaving the equity on the table, it's the market itself. And as you buy into the idea that whatever the stock is priced at is the true value, then the company is priced correctly according to those lights.

A quote from a previous post of yours here:

You really don't have to quote me back... I remember what I said. I'm not saying that Apple is deliberately leaving equity on the table (though they could do more to reassure stockholders about any number of issues that have raised management questions over the last few years). It's the markets that have left the equity on the table. No matter how you want to say it, they are a growth company trading at value multiples. They have to double earnings to raise the stock price by half. The concern this naturally raises for an investor is what happens to the stock price when they become an actual value company, when their earnings growth is no longer stratospheric.

AAPL was trading at multiples over 30 for several years, even as high as the mid-40s. I'm not saying they should be now, but plotted against growth this is about the cheapest they've been, possibly forever.

I"m not sure I buy your argument that sentiments have changed for the worse. You look at the analyst projections for one-year stock price and you get lots of very optimistic numbers, unlike anything I'd seen in the years when Apple was hardly covered by anyone. In fact I think AAPL may be suffering from an excess of optimism.
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post #96 of 97
Quote:
Originally Posted by Dr Millmoss View Post

You really don't have to quote me back... I remember what I said. I'm not saying that Apple is deliberately leaving equity on the table (though they could do more to reassure stockholders about any number of issues that have raised management questions over the last few years). It's the markets that have left the equity on the table. No matter how you want to say it, they are a growth company trading at value multiples. They have to double earnings to raise the stock price by half. The concern this naturally raises for an investor is what happens to the stock price when they become an actual value company, when their earnings growth is no longer stratospheric.

AAPL was trading at multiples over 30 for several years, even as high as the mid-40s. I'm not saying they should be now, but plotted against growth this is about the cheapest they've been, possibly forever.

I"m not sure I buy your argument that sentiments have changed for the worse. You look at the analyst projections for one-year stock price and you get lots of very optimistic numbers, unlike anything I'd seen in the years when Apple was hardly covered by anyone. In fact I think AAPL may be suffering from an excess of optimism.

I quoted it to point out that you've said two differing things. That Apple is a value stock, and Apple is priced as it should be. Either it's priced properly, or it's not. Which is it?

I feel that Apple is a good value because I believe that the price will rise at a fairly good clip as the year goes on. You don't seem the believe that, so you think it's a value stock.

I don't feel Apple should be sitting at 30. I'd like to see it get to 20, and I'd feel secure at that time.
post #97 of 97
Quote:
Originally Posted by melgross View Post

I quoted it to point out that you've said two differing things. That Apple is a value stock, and Apple is priced as it should be. Either it's priced properly, or it's not. Which is it?

I feel that Apple is a good value because I believe that the price will rise at a fairly good clip as the year goes on. You don't seem the believe that, so you think it's a value stock.

I don't feel Apple should be sitting at 30. I'd like to see it get to 20, and I'd feel secure at that time.

I perhaps have said the same thing two different ways, but I haven't said two different things. I'm not making any claims about how AAPL "should" be priced, and it's not about how I think the stock "should" be valued. I am saying, simply, that it's a growth stock being priced by the markets as a value stock. In other words, it is being priced by the markets like a company that isn't growing nearly as rapidly as it actually is. This (to me, anyway) naturally raises a serious question. That was the point of the analysis.

If AAPL returned to a PE of 20 and (even more importantly) was able to hold at 20, then the stock would again begin to pace earnings, and this discussion becomes fundamentally moot. However, the point again is that AAPL's PE has been compressing fairly steadily for a year or more, which is a sign that the markets are collectively betting that the company's earnings growth story is winding down. Some of the analysis linked to here suggests that the market sentiment will turn a corner, back to seeing AAPL as a growth story. The other possibility, in fact the current trend, is to continue to discount earnings, driving AAPL's PE lower.

Which scenario is going to play out? I have no idea. But I do know that as an investor, I am watching with concern.
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