Wowed Wall Street watchers raise forecasts after Apple's 'perfect' $46B quarter - Page 2

It might help you to understand the literature a bit better. Trying to offer some help in that direction, that's all. There is no law against willful ignorance.


Frankly, not even close to the ludicrousness that your intransigent posts display!

As I said before, a conversation with you is a waste of time. Should have known better than to start this.....

Well, that was a total non-response, which I guess experience suggests I should have expected. I raised lots of points and backed them up with responsible arguments well supported by the "literature." You just steered yourself around them, per usual.

And AMZN is vastly overvalued - by almost any standard.


Doesn't matter. Even with zero growth rate, AAPL is undervalued.


Lots of companies rely on single products and are not valued as low as AAPL.


You are absolutely wrong. It is a very common analysis.

The cash is worth exactly its face value. When you are trying to figure out what the company is worth, any comparison must take into account the cash.

Let's say Apple only had $1 B in cash. Would the share price be the same as it is now? Or if AAPL had $500 B in cash. No effect on share price? Obviously, it would.


The explanation is that you don't know what you're talking about. Dividends are taxed to the recipient as normal income. You're using the capital gains tax rate - and dividends are NOT taxed at capital gains rates.

First of all, no it is not a common analysis. Getting a mention here or there occasionally is not a common analysis. And no, it would not make any difference to the share price because the cash does not benefit stockholders and has no impact on earnings. Cash is not a factor in calculating PE or any other stock metric for a reason, and this is the reason.


Qualified dividends. In fact under the current qualified dividends rules some taxpayers pay a rate of 0%. You might want to look this stuff up before you accuse someone else of not knowing what they are talking about.

I'm not sure what you're hoping it links to? Much like P/E, PEG is just another tool for comparing valuation.

P/E can be useful for comparing like companies. But the example given earlier was trying to the P/E of Apple vs. Amazon. In those cases, PEG is another widely used tool.

Not so fast. We've got another year of tax-advantaged status for dividends.

http://en.wikipedia.org/wiki/Dividend_tax#United_States

What do you think?


I am afraid you don't really get it.

The P/E ratio (where 'E' is forward earnings) has a very specific meaning that derives from valuation fundamentals, in turn derived from standard DCF models of firm/equity valuation. The value of an enterprise is its expected future Unlevered Free Cash Flows discounted at its cost of capital. If we assume that earnings are a decent proxy for UFCF - which would roughly be the case if a firm does not have too much debt, and Depreciation equals Capex, and Change in Working Capital is zero - then it says that equity value is the sum of expected future earnings discounted at its cost of equity (call it rE). Under assumptions about average long-run growth in earnings (call it 'g'), it can easily shown that:

P/E = 1/[rE g].

In other words, the P/E ratio is a very specific statement about a firm's growth-adjusted discount rate. High P/E ratios are associated, in other words, with high expected earnings long-run growth rates, and low (more precisely, lower-than-expected) cost of equity.

Care to tell me what the 'PEG' means, in similar terms?


P/E has nothing necessarily to do with 'like' companies. It can be used to compare the earnings potential, relative to growth potential, of any company/asset relative to any other company/asset.

To say that 'PEG is a widely-used tool' to justify it is like saying 'astrological forecasts are widely read' so the pattern of constellations must affect our lives.

PE when stated as such is always trailing, not forward. Forward PE is always stated as Forward PE and is distinguished from the other number because it is based on a consensus estimate of earnings growth four quarters out instead of actual results of four quarters back.

In any case you are being far too pedantic in your objection to PEG. It is a commonly used measure of stock performance.