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Apple had a P/E ratio of something like 12-13 and then went on to more than double it’s stock price. Markets are not always very wise.
by rdlecler1 7y ago
Apple had a P/E ratio of something like 12-13 and then went on to more than double it’s stock price. Markets are not always very wise.
- tuesdayrain 7y agoA P/E ratio of 13 seems tiny. I remember when AMZN was over 1000.
- scottlocklin 7y agoYeah, I remember too: that was when they had giant opportunities for growth. Lower P/E means lower opportunity for growth. Apple's growth prospects are fairly low on the current trajectory of the company. They were also fairly low when it was 13, regardless of what the stock price did.
- formercoder 7y agoApple and FB have very different cap structures so let’s compare their EV/EBITDAs not P/E. FB is ~16 and AAPL is ~12. Much closer from that perspective.
- arcticbull 7y agoP/E ratios aren’t absolutes, they vary from industry to industry. Hardware companies have lower P/E ratios than software companies and Apple has traditionally been regarded as a hardware company.
- formercoder 7y agoMultiples like P/E are just a proxy for cash flows, discount rate, and growth. That P/E tends to stratify on industries makes sense not just because of growth, but also its sensitivity to capital structure. So asset heavy companies with lots of leverage will have different P/E ratios even with the same unlevered free cash flows.
- jbverschoor 7y agoI think that even didn't include their cash reserves.