Apple, the $347 billion maker of iPhones and iPads became, although briefly, the most valuable company in the US when it passed Exxon Mobil yesterday. It lasted a few hours until the market put Exxon back on top. Is it a hint at brighter future for Apple?
According to NYtimes, Robert Cyran doesn’t understand why Apple isn’t headed straight towards hitting the $1 Trillion mark.
Apple’s sales have been surging 80 percent a year, and its profit faster. What’s more, it trades roughly in line with the growing stock market — and at less than half the price-to-earnings multiple it fetched in 2006, when revenue growth was much slower. Apple now trades at about 11 times estimated earnings for the fiscal year ending September 2012. The Standard & Poor’s 500-stock index is valued at about 10 times next year’s profit. But Apple’s sales growth is nearly 10 times faster than that of the average company. Apple also holds $76 billion of cash and investments.
So, what’s the deal?
Put Apple on the same P/E multiple it traded on in 2006, and it would be worth almost $900 billion. A premium for today’s faster growth could get it to $1 trillion. Apple can’t be so cheap just because Steven P. Jobs, the chief executive, is in bad health.