Updating the graph showing daily P, P/E and (P-$)/E since October 2006. (P-$)/E is the same now as it was in August 2009 and shows no consideration for 75% average earnings growth since then. As guidance and analysis shows, this growth is likely to continue for a few more quarters.
The following chart shows the value of sales per quarter (in $million) since the beginning of 2005. What’s interesting to note is that more than half of sales is contributed by products which did not exist three years ago (iPhone and iPad). Music and iPod did not exist 10 years ago. It’s entirely appropriate that Apple removed “Computer” from its name, though they still sell mostly computers of a different kind.
asymco | Apple’s Valuation Struggle.
As despondency over Apple’s 75% earnings growth rate continues, it’s time to revisit the historic P/E in contrast to growth for the company’s earnings.
The latest chart (below) shows the company’s P/E ratio (in blue, left scale) vs. the trailing twelve months rolling growth rate (in brown, right scale) and the ratio between these two (in red, right scale).
The red line can be considered a form of PEG (Price over Earnings over Growth) with the caveat the the Growth is trailing not forward and hence is based on actual data not fictional analyst “consensus”. I call this PETG (Price over earnings over trailing growth).
The actuals show that Apple’s price to trailing growth ratio is dropping to lows unseen since last year when the recession was still in effect. At PETG below 20 the predominant sentiment displayed is extreme pessimism. 100 could be considered an even balance between pessimism and optimism. It now stands at 35.
Following up on last quarter’s “asymco | Apple’s Growth Scorecard.”
June quarter showed a significant increase in sales growth (due to the iPad) while the iPhone growth moderated to 74%. Overall earnings growth is a solid green.
Historic Apple stock price vs. earnings (in green), and 20x earnings (in red) and 30x earnings (in purple). Earnings are restated according to current financial reports from the company.
