NEW YORK: Apple's first quarter in post-Steve Jobs era was a success. Apple reported that it sold more than 37 million iPhones and some 15.5 million iPads during its last quarter after the market closed Tuesday.
Its shares jumped more than 6 percent and hit an all-time high Wednesday, leapfrogging Apple past Exxon Mobil to once again become the most valuable company in the world.
In what seems to be a quarterly routine, analysts scrambled to raise their target prices for the company following its earnings announcement. Among the highest target: $670, 50 percent above its Tuesday close.
A stock as popular with investors as Apple typically has contrarians pointing to signs of trouble. But there are several reasons why simple contrarianism might not pan out this time.
GO TO THE SOURCE
The best way to play Apple's earnings? Buy Apple. Despite gaining more than 25 percent over the last year, Apple still looks like a value stock to many investors.
"The stock is cheaper now than the day I bought it," said Stephen Coleman, head of St. Louis-based Daedalus Capital. Coleman began buying Apple at $11.20 in February 2004, he said. Since then, he's notched a 3,888 percent gain.
Apple is trading at a price to earnings ratio of 12. The broad Standard & Poor's 500 index, meanwhile, trades a P/E multiple of about 13. By comparison, Amazon.com, Apple's most direct competitor in the tablet market, trades at a P/E of 98.
The company is trading at a discount according to other metrics as well. Based on its growth rate, the company's intrinsic value is $533.40 per share, a nearly 20 percent jump from its current share price of $446.66, according to Starmine.
Its gross margins increased 4.4 percent from the prior quarter, according to Michael Holt, an analyst at Morningstar.
Why aren't Apple shares trading higher?
The market appears to be discounting Apple's ability to maintain its earnings growth now that it has a dominant position in the smartphone and tablet markets, analysts said.
The company's forward price to earnings ratio is now just 11.1 times future earnings, according to Starmine.
High forward P/Es typically imply that investors expect earnings growth to accelerate. In 2003, for instance, the company traded at a forward P/E ratio of 80 after introducing the iPod some two years earlier, according to Starmine.
Apple also has nearly $100 billion in cash on its balance sheet. Possible options for that staggering sum is something that the company is "actively discussing," said Peter Oppenheimer, Apple's CFO, on its earnings call.
The company's cash pile equates to $103 per share, noted T. Michael Walkley, an analyst at Canaccord Genuity.
"With Apple expected to cross $100 billion in cash during the March quarter, we believe this milestone might push Apple to announce a dividend," he wrote in a note to clients.
indiatimes.com
Its shares jumped more than 6 percent and hit an all-time high Wednesday, leapfrogging Apple past Exxon Mobil to once again become the most valuable company in the world.
In what seems to be a quarterly routine, analysts scrambled to raise their target prices for the company following its earnings announcement. Among the highest target: $670, 50 percent above its Tuesday close.
A stock as popular with investors as Apple typically has contrarians pointing to signs of trouble. But there are several reasons why simple contrarianism might not pan out this time.
GO TO THE SOURCE
The best way to play Apple's earnings? Buy Apple. Despite gaining more than 25 percent over the last year, Apple still looks like a value stock to many investors.
"The stock is cheaper now than the day I bought it," said Stephen Coleman, head of St. Louis-based Daedalus Capital. Coleman began buying Apple at $11.20 in February 2004, he said. Since then, he's notched a 3,888 percent gain.
Apple is trading at a price to earnings ratio of 12. The broad Standard & Poor's 500 index, meanwhile, trades a P/E multiple of about 13. By comparison, Amazon.com, Apple's most direct competitor in the tablet market, trades at a P/E of 98.
The company is trading at a discount according to other metrics as well. Based on its growth rate, the company's intrinsic value is $533.40 per share, a nearly 20 percent jump from its current share price of $446.66, according to Starmine.
Its gross margins increased 4.4 percent from the prior quarter, according to Michael Holt, an analyst at Morningstar.
Why aren't Apple shares trading higher?
The market appears to be discounting Apple's ability to maintain its earnings growth now that it has a dominant position in the smartphone and tablet markets, analysts said.
The company's forward price to earnings ratio is now just 11.1 times future earnings, according to Starmine.
High forward P/Es typically imply that investors expect earnings growth to accelerate. In 2003, for instance, the company traded at a forward P/E ratio of 80 after introducing the iPod some two years earlier, according to Starmine.
Apple also has nearly $100 billion in cash on its balance sheet. Possible options for that staggering sum is something that the company is "actively discussing," said Peter Oppenheimer, Apple's CFO, on its earnings call.
The company's cash pile equates to $103 per share, noted T. Michael Walkley, an analyst at Canaccord Genuity.
"With Apple expected to cross $100 billion in cash during the March quarter, we believe this milestone might push Apple to announce a dividend," he wrote in a note to clients.
indiatimes.com
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