Apple shares are getting killed after Apple fell short of Wall Street expectations with its earnings report. Shares started sliding in September, dropping from $705 to about $514 just before the earnings came out. And then, when investors saw the numbers, the bottom fell out and Apple stock plunged more than $50, settling at $460. They may drop more today once the market opens, since all the analysts on Wall Street are bashing Apple.
Which raises the question: Is now the time to buy Apple?
Keep in mind that investors have made a lot of money by buying Apple when things looked bleak for the company. Also keep in mind that right now, by every measure, Apple stock is ridiculously cheap.
The Numbers
The company has $140 billion in the bank, and a market value of $483 billion. That in itself makes no sense.
Apple stock is trading at 11.6 times trailing 12 months earnings. That’s cheaper than IBM, which trades at 14 times trailing earnings, and Microsoft, trading at 15. It’s half the multiple that Google is carrying (23). It’s a fraction of what Facebook is selling for (160 times trailing earnings). It’s nearly as cheap as Dell, which is trading at 9 times earnings and doing so poorly that the company is considering going private in a buyout.
Apple is cheaper than Johnson & Johnson (19) and Procter & Gamble (20) and Hershey (17.6) and McDonald’s (17.6). In fact Apple is cheaper than the S&P 500 (currently trading at 17 times earnings), cheaper than the NASDAQ (20.6), cheaper than the Dow Jones Industrials (15).
Do you really think Apple is a worse company, or has a less bright future, than the average company on a stock index?
Well, that’s what Wall Street is saying.
Apple is cheap, cheap, cheap. This is bargain basement, fire sale pricing.
Negative Sentiment
Better yet, everyone on Wall Street is going negative. Jim Cramer says Apple has lost its magic. Nomura says Apple is entering its “ex-growth” era. Investor Jeff Gundlach says Apple is heading to $425 and could go as low as $300.
TheStreet.com says Tim Cook sounded like the former CEO of RIM when he did a call with analysts last night. A very bullish Apple analyst has lowered his target price for the year ahead, though he still rates the stock a Buy.
All you Apple fanbloggers who are saying that there’s nothing wrong with Apple, and that “Apple didn’t miss, Wall Street did” – are you ready to put your money where your mouth is?
Seriously, who’s buying? Are you? Let’s hear the bullish case for Apple.
Image courtesy of Reuters.
