Apple’s Unbelievable Valuation & Price Sensitivity Analysis

The market is beginning to reprice Apple to a multiple that it deserves, in our opinion, and is getting an added boost today from James Altucher’s call that Apple is a “no brainer…to hit a trillion dollar market cap within the next year.”   That’s a $1,000 stock, folks!

Altucher’s incredulous call caused us to revise our Apple sensitivity analysis.   We couldn’t believe the numbers and we had to check and recheck the data.   We invite you to do the same, which might increase your conviction in the stock.

Apple currently trades at $469, which consists of almost $104 in cash per share.  The company has no debt and has a trailing EPS of $35.11, or a 13.36 multiple and 10.41 cash adjusted multiple.  Extremely cheap given the latest quarter EPS growth exceeded 115% y/y.

Even assuming a conservative growth rate of half the 115% for the rest of the fiscal year, Apple could earn $46 per share this year.  This equates to a cash adjusted P/E ratio of less than 8x.  Stunning!

The stock has run quite a bit and made need to consolidate some gains, but our sense the market is finally starting to believe and is now in full repricing mode, which can take AAPL much higher.  This is an epic company as the world  moves into the Wireless Age.

Long, always with a stop.

(click here if chart is not observable)

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5 Responses to Apple’s Unbelievable Valuation & Price Sensitivity Analysis

  1. always challenging says:

    I’m long aapl and would love to see its multiple repriced to where it deserves. The trouble is all funds who can be long this stock (and are bullish, of course) already hold maximum positions. What we need to see is for the mgmt to issue a dividend to get a multiple boost – then the value guys that require a return of cash should get in.

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