Apple Inc. (NASDAQ:AAPL) Isn’t As Cheap As Wall Street Claims

Page 1 of 2

Apple Inc. (NASDAQ:AAPL) is one of the most popular stocks among Wall Street analysts. According to Thomson/First Call 48 of the 58 analysts covering the stock have a buy or strong buy rating on the stock. Apple’s one year median price target of $750 is also 47% higher than its current price. Analysts also expect that Apple Inc. (NASDAQ:AAPL) will make $49 in its current fiscal year ending September 2013 and $57 in FY2014. Even the most bearish analyst thinks AAPL will earn $41.75 in FY2013. So, according to Wall Street Apple’s forward price-earnings ratio is at most 12.

Apple Inc. (NASDAQ:AAPL)

Apple also currently has $128 per share in cash and investments on its balance sheet. After backing this out, Apple trades at a forward PE ratio of 9.5 according to the most bearish analyst. Apple’s forward PE ratio (excluding cash) falls to 8 if we use analysts’ consensus estimate. That’s a really cheap valuation for a stock that is expected to grow its earnings by 21% over the next 5 years. That’s not a typo. Wall Street analysts expect Apple Inc. (NASDAQ:AAPL) to grow its earnings per share to $125 in 5 years. That’s an estimated annual growth rate of 20.7% for a $500 billion company.

Don’t be fooled by these wild estimates. Just three months ago the same analysts expected earnings of $53.30 per share for FY2013, almost 10% higher than their current estimates. Their EPS estimate for FY2014 was also $61 just three months ago.  Analysts’ current year estimates are starting to get more realistic but their really haven’t updated their 5-year estimates. Let’s take a closer look.

Apple Inc. (NASDAQ:AAPL) earned $44.15 in its 2012 fiscal year. So, analysts expect a 10.5% increase in earnings in 2013. Three months ago their 2013 growth estimate was 20.7%, same as their 5-year growth estimate. I am extremely skeptical about all of these estimates. Here is why:

Page 1 of 2

Dividend Stock Alert - Billionaire Robbins' Top Dividend Idea With 70% Upside Potential

Get Paid 3.5% Per Year While Waiting For The Stock Appreciate 70%

Larry Robbins' Glenview Capital Opportunity Fund returned 101.7% in 2013 and Robbins personally made $750 million. The same fund returned 25.3% in 2014. In this FREE REPORT we will share Robbins' top dividend idea that yields 3.5% and has been increasing its dividends for 39 consecutive years. Robbins thinks the stock has the potential to appreciate 70%.

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Click here to Read Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 74 percentage points in 2.5 years. Our beta is only 1.2 (download a FREE newsletter and see the details inside)

Lists

Best Selling Magazines in the World

Shortest People in History

The Most Celebrated Holidays in the World

Most Expensive Handbag Brands in the World

Top Selling Comic Book Issues of this Century

The Most Powerful Women in Politics

Best Paid DJs

Most Rebellious Female Artists

Best Paid TV Actresses of 2014

Best Paid Actors of 2014

Most Expensive Horses in the World

Tallest People Ever

Most Encouraging Feminist Celebrities

Best Paid Supermodels of 2014

Top 10 Suburbs for Retirement in 2015

10 Wealthiest Cities in America

Top 10 TED Talks for Entrepreneurs

Best TED Talks on Education

25 Most Dangerous Places to Live in America

Top 10 Ski Resorts in the United States – 2014 List

Top 10 Most Remote Places in the World

Most Visited Museums in the United States

Wealthiest Photographers in the World

Most Famous Gay Athletes

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!