Wall Street’s Infinite Loop: Updated P/E analysis for AAPL

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    Posted: 27 October 2010 09:05 AM

    I updated the valuation data to reflect the latest earnings call.

    ‘The only conclusion I can draw is that the market does not believe that Apple has significant growth opportunities. A P/E of 20 with consistent 70% growth is, to be blunt, damnation. For comparison, Amazon just reported 16% growth in earnings and was rewarded with a P/E of 68.

    Amazon notwithstanding, is Apple an anomaly? Is the disconnect between earnings growth and the stock price unique to Apple or does it apply to most other equities? Is pessimism about Apple a symptom of pessimism in general?”

    http://www.asymco.com/2010/10/27/wall-streets-infinite-loop-how-aapl-is-valued/

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    Posted: 27 October 2010 10:40 AM #1

    asymco - 27 October 2010 12:05 PM

    I updated the valuation data to reflect the latest earnings call.

    ‘The only conclusion I can draw is that the market does not believe that Apple has significant growth opportunities. A P/E of 20 with consistent 70% growth is, to be blunt, damnation. For comparison, Amazon just reported 16% growth in earnings and was rewarded with a P/E of 68.

    Amazon notwithstanding, is Apple an anomaly? Is the disconnect between earnings growth and the stock price unique to Apple or does it apply to most other equities? Is pessimism about Apple a symptom of pessimism in general?”

    http://www.asymco.com/2010/10/27/wall-streets-infinite-loop-how-aapl-is-valued/

    It seems like the new normal.  For years Apple rode along with an average p/e of 35 but now we seem to be stuck in the 15-25 range.  Based on the current normal, I think I’ll be a seller if we get back to 35.  Apple is such a large part of the indexes that the overall market has a much greater impact on Apple’s P/E.