Apple is only selling at a deep discount to its peers and the market for a couple of reasons.
1.) They have had a few tough quarters on a comp basis, largely because they have blowout revs and margins (unsustainable margins) in the previous quarters. We will be through those quarters after the upcoming earnings in a week or so. The next three quarters will be set-up for blowouts again. Particularly if the product refreshes are received well and there is a potential new product category like a watch. Once the market realizes that AAPL can still grow earnings at a 20% clip the market will quickly move Apple into the 12-16 p/e range again. This means that AAPL could easily be trading at $800.00 by the end of 2014 just based on current earnings and p/e expansion to 16. However, by this time next year AAPL's earning could easily be 20% higher on an annual basis than they are today, which means that AAPL would be trading at $880.00 at a 16 p/e. Google is at a 26 p/e and they only grow earnings in the 20-30% range. MSFT and DELL trade at a premium to AAPL and they are dead companies as far as growth is concerned.
2.) Idiot sell-side analysts that don't understand the AAPL phenomenon and have the entire market hoodwinked with their idiocy. The "truth" is that AAPL continues to pick-up market share in the states to its highest level ever recorded in June at over 50% market share. AAPL is killing it in Asia (especially India). The lion's share of all global profits in smart phones (72%) and tablets (91%) are made by AAPL. Customers are much more satisfied with AAPL products over android products. AAPL satisfaction, loyalty and retention rates are sky high at 85%. More that have of all Samsung customers say they are strongly considering another phone at renewal. Very few consumers intend to buy a BBRY, HTC, NOK/MSFT phone. The vast majority of mobile search and mobile e-commerce are done on AAPL devices.
assuming current earnings are sustainable/growing aapl is a coiled spring. If earnings are fading and not ever coming back (likely given fierce competition) then aapl is just a value trap.......
PE under 10 is merited until aapl can show me the $$$ !!!!!!!!!!!
Problem is for now EPS is going down, so P/E will expand at the same stock price. I think Apple may be able to stop the decline in the fall with new products. But current product refresh wont be enough to turn this around, they need new product caterories. Problem #2 is I am not so sure we will get new product or if even current ones will spark more unit sales than last year.
It may be true that Apple is doing great in north america, but in India, China and EU its losing market shares and unit sales. Good performance here is a trap if you only look at that.
I disagree that a current product refresh won't be enough. I think it can be. At the end of the day its all about earnings and earnings growth. I think AAPL can easily grow earning in the 10-15% range over the next 12 months. Add to that 12% of the shares taken off the market in the buy-back and you have over 20% earnings growth. This is all without a new product category. Also, AAPL is doing great in China and India. I care less about market share in an expanding market that absolute sales growth which is growing rapidly. An emerging market phone (which we all know is coming) will add at the margin, a new category like an iwatch (we all know is coming) will add at the margin, a killer app will add at the margin, I great product refresh will add at the margin. The next 12 months for AAPL should be great.
Apple ultimately will play its hand in morphing the existing cable TV model by striking more & more deals with content providers. (The recent deals with Time-Warner and HBO is only the beginning.) Apple itself could even invest in its own content provider, or provide some investment capital to external business units. The thing is, right now, Wall St. is focusing ONLY on Smartphones; as significant as that market is, Apple can write its own ticket basically anywhere it wants to go.