Thursday, February 4, 2010

So what the f**k is AAPL's P/E??

Not just the P/E. It's mainly the ttm EPS, but also the real historical growth rate, all the financials, even analysts estimates are missing. I mean, come on, it's been 10 days since the report. What a mess.

Wasn't the internet supposed to be the realm of immediately updated information available to all for free?

What's the point of having Yahoo! Finance, Capital IQ, or even Thomson-Reuters services for that matter, keeping track of companies and estimates for the public, when they happily publish erroneous data for days or weeks and no one can do anything about it?

Does anyone even care? Where's the f**king SEC?

Yahoo! data still a mess. See
Let them hear it using this form (make reference to ticket number 3385526).
It's been three four six seven! weeks since the report and yahoo's still a mess. Anyone, how do we fix this:
Well, it took them seven weeks, but they finally did it!
And they f'd it up again! Amazing. Eight weeks now.
And now it's good again, hopefully for more than two days. Two months to fix this...
And it's bad again. More than 9 weeks. Got tired of updating so here's a day counter for this.

Fixed! Good job, Yahoo! Finance, despite the 11 weeks your users were in the dark. Unfortunately, some who might have wanted to jump in at $190 are now looking at $247. Not to worry Yahooers, it's still going to double in a year or two.


Horace Dediu said...

I, like you, do my own calculations and can thus check who's doing their jobs and who's not.

The only place I see it posted correctly is on Google/finance (18.91 as of right now)

Yahoo's number (25.84) is wrong and there is no way I can tell to report it. Yahoo cites Capital IQ as the source.

There is an asymmetry of information in the world, take advantage of it.

Horace Dediu said...

It gets better. Yahoo also mis-reports the cash. They don't include long term marketable securities (Yahoo reports only 24.8b in cash vs. the 39 that Apple reports). Lots of people cite the lower figure from Yahoo which misses nearly a third of the cash.

I have a graph with the split between the three types of securities Apple holds here:

The part that gets ignored is growing very rapidly. The only difference between the long- and short- term securities is maturity date and not liquidity.

Apple's financial reports detail all this very clearly and management cites the full figure diligently.

With a mis-reported cash, then all balance sheet ratios are wrong (i.e the cash per share, the book value, enterprise value, etc.)

Daniel Tello said...

As you could tell, my title question is rhetorical. My amazement is with the lack of accountability. Where does the onus lie on getting this right? Us investors, of course, but also the whole investing community, which to me includes the media. I'm just surprised this isn't getting reported anywhere.

Have you taken a look at AAPL's analysts estimate page at yahoo finance?

Not only all the EPS estimates are missing, but the revenue estimates there are for past periods, like it claims the current quarter is Mar-2009, and current year as FY 2009... is the site corrupted? hacked?

They have ThomsonFN as their estimates data provider, yet others who use Thomson Reuters ( for example) have the correct data (I see and use FactSet data and they have it right). I haven't seen anyone have such a mess as yahoo has.

There's simply no excuse. Only thing I can think of is someone's getting nicely paid to keep things like this.

Horace Dediu said...

I've been looking at Yahoo's data for years. It's always frustrating on how full of holes and errors it is. The PEG ratio is random, the beta is inaccurate.

They are sometimes slow in putting up relevant data, but, as you point out, the data feeds they are using are not.

I try to keep sane by repeating Hanlon's Razor:

Never attribute to malice that which can be adequately explained by stupidity.

Allen said...

So at ~18 P/E, with that big pile of cash they are sitting on, they are (gasp) UNDERVALUED right now? Is that possible? AAPL? And not being at $78?

Anonymous said...

The Yahoo financials and other such sites are for the small potatoes. They can't and don't move the markets. It takes boat loads of money to move the stock - e.g., 15 million shares traded in a day is like $3 billion dollars, and a $5 swing translates to $75 million of trading gain or loss. That is not Joe Individual.

Right now, some people with very deep pockets are playing games with the stock. It takes some very big balls to sell the stock short when all evidence points to the stock being worth 50% more.

Roy said...

One other comment (that was me above): if you look at the intra day charts, some of the moves are incomprehensible - they don't fit any standard technical trading approaches. The moves are sudden, sharp, followed by equally unexpected reversals. This is a very tough environment for both investors and traders, and whoever is causing these waves have enormous resources and staying power, for sure.

Daniel Tello said...

3 weeks and yahoo's still a mess. Anyone, how do we fix this:

Roy said...

It's not just AAPL that Yahoo is delinquent on. At any rate, the people that have the ability to move the stock price of a company like Apple are not making their decisions by what is published in Yahoo financials. While it is a useful source of information for individual investors and day traders, it should have no material impact on AAPL price.

The more important question is, The Big Money knows full well what AAPL is worth, or at least that it is worth 25-50% more, perhaps even more. So why is the price struggling at the $200 level?

Roy said...

Deagol - This morning's announcement of reMail's acquisition by Google may finally shed some light why AAPL price is struggling.

If you notice, since 1/4/2010, they've sold off GOOG from a high of around $629 to a low of $523 or -17%, and GOOG has been in a "dead cat bounce" for the past few days, staying in the $530 range.

In comparison, AAPL has sold off from a high of $215.59 to a low of $190.25 or -12%, and AAPL is struggling to hold the $200 range.

Two companies both with tremendous earnings and cash flow, but on a sizable collision path. Perhaps a lot of fund managers are feeling this is an increasingly intense war growing between the two companies, one that could result in a mutually assured destruction. Eventually, these lead to price wars and profit erosions a la the airline companies.

Perhaps the big funds sense the most spectacular growth might be at an end for both companies and want to lighten up their holdings in both GOOG and AAPL?

Roy said...

BTW, during the same time, they've also dumped AMZN, down from $146 to $115 or 21.2%, and it looks like it's heading further down.

Another observation FWIW - up until recently, AAPL and GOOG used to maintain a 3:1 relationship in their price movements. Meaning, if GOOG went up (or down) by $3, AAPL would move up or down by $1, and there was roughly a 3:1 ratio between GOOG and AAPL prices.

More recently, that relationship is no longer holding. Today, for instance, AAPL is down $1.45 and GOOG is down $1. Don't know what if anything that means...

Daniel Tello said...

Thanks for your observations Roy. A couple of things:

20M shares volume is no big deal for AAPL's retail shareholders to move. Institutions control roughly 3/4 of the float, which leaves about 230M shares in "little" guys' hands. Only 5% of them freaking out would represent more than half the volume. And you know most of this 20M volume is algo trading, so 50% of it suddenly becoming real trading must move the stock.

Despite the steeper pullbacks you mention for GOOG and AMZN, they remain overvalued vs. AAPL. Google seems to be acting like Microsoft in the last decade, in a desperate need to hit some new growth alternatives. Market will not pay 30x for 15% growth. Yes, AMZN needs to correct more. And it's not just iPad vs. Kindle: its nosebleed valuation was (and still is) simply out of whack. Despite its recent growth spurt, AMZN is just a retailer and 40% growth is simply not sustainable. Both AMZN and GOOG hold de facto monopolies in their traditional markets, and need to explore uncharted territory for them (hardware) in order to keep growing.

So, GOOG=MSFT and AMZN=WMT. In contrast, Apple remains young in spirit and with huge growth potential from iPhone, Macs, and now iPad, all within Apple's expertise domain. Yet market is in "show me" mode. No point in further compressing its PE below 18, but market will come to its senses in a couple more quarters of 30%-40% EPS growth for AAPL. It's inevitable.

To best compare GOOG and/or AMZN with AAPL's stock price, don't look at one day. Try this and this. If you study both trends in a historical context, you'll see that AAPL is not necessarily deserving a pullback similar to the other two stocks. On the contrary, I see AAPL easily reaching half of GOOG's price, and more than 2x AMZN (probably 2.5x) pretty soon (a few months).


Roy said...

I didn't know let you plot one divided by the other as bar, candlestick P&F etc. charts! I simply use the Yahoo comps.

But I agree with what you're saying. Especially, if you can compare the relative market caps after taking out the cash. AAPL is significantly undervalued relative to GOOG and AMZN is hugely overvalued relative to everything, period.

Which makes you scratch your head all the more - today, for instance, things finally turned positive for the big tech stocks, but AAPL is up like 20 cents for close to unchanged, GOOG is up almost $3 for a 0.5% gain, and AMZN is up $1.05 for close to a 1% gain. WTF??!

For whatever reason, supply is continuing to overwhelm demand for AAPL.

Alex said...


I have used your spreadsheet for about two years and appreciate all the work you do. My question is - have you been able to revise your model yet to incorporate the actual accounting changes that took effect in Q1 and present a new estimate for Q2 GAAP EPS. I messed around with it a little bit and came up with a GAAP number of $2.63. Does this mesh well with what you are looking for?


JavaJack said...

And then you get commentary by people like this Sane Investor who thinks that Apple is in a bubble and overvalued even now. Would someone please set this guy right?

Daniel Tello said...

Alex, thanks for the kind words. Yes, that is in the ballpark of what I'm looking for Q2.

java, either that guy has no clue what he's doing or more likely he's a hitwhore. Love his brazen confidence in his equating AAPL to XOM, PG, MSFT and DELL. I've never seen any of these so called "value analysts" come clean a year or two later and admit to their shortsightedness. He can't even spell PG's name right, and it's not a typo as he did it in every mention of that company.

Roy said...

I'm sure followers of this blog would have likely already seen this about Morgan Stanley's price targets for AAPL ($250 base line, upside $435, downside $180):

I hope with the rebound on Thursday, 2/25, we're finally headed up again...

Roy said...


I'm sure you saw this bit about Apple approaching a market cap of $200 bln:

At a share price of $300, Apple would be very close to Exxon-Mobil, and be the #2 public company in the world in terms of valuation.

If Apple's PC/notebook market share continues to grow and its phone market doubles (both possible), and if iPad and its follow ons establish a legitimate category that Apple dominates, you could be looking at Apple becoming the first company in the world to touch half a trillion dollars in market cap. That's probably bigger than the GDP of half the countries in the world!

Of course, the fund managers could get spooked once Apple's valuation neared or equaled Exxon-Mobil ("How can any electronics company be bigger than Exxon?"), and between the fund managers selling off and short sellers piling on, the stock might be stuck in a trading range of $250-$300 for a very long time (as has been the case with Wal-Mart).

I wonder how far you've seen in your crystal ball, as to the ultimate potential valuation Apple could climb to.


Daniel Tello said...

Roy, it'll happen. Apple should be #1 in market cap in just a couple of years.

EPS Growth Rate (last 5 yrs) 92.52% ...hard to wrap your head around this: EPS almost doubled (on average) every single year for the last 5 years, and it's not a typo!
LT EPS Growth Rate (next 5 yrs) 18.89%
Net Profit Margin (TTM) 20.04%
P/E Ratio (TTM) 21.37
PEG 1.13

Forget XOM:
EPS Growth Rate (last 5 yrs) 0.47% (not 47% but less than half a percent!)
LT EPS Growth Rate (next 5 yrs) 6.32%
Net Profit Margin (TTM) 6.33%
P/E Ratio (TTM) 16.68
PEG 2.64

I think XOM's EPS last year fell to less than half of the historical trend, which may be distorting the TTM P/E. Still, this stock is going nowhere compared to AAPL.

As for WMT:
EPS Growth Rate (last 5 yrs) 8.64%
LT EPS Growth Rate (next 5 yrs) 10.27%
Net Profit Margin (TTM) 3.66%
P/E Ratio (TTM) 14.54
PEG 1.42

If you think Apple will grow EPS at less than 10% for the next 5 years, then yes, maybe this is the trading range and even $200 may be expensive. That's what you're comparing it to when bringing up XOM and WMT.

I see Apple growing EPS about 35% for the next 3 years, so that 19% analysts are expecting will be quite low.

What was Microsoft's long-term EPS growth after it surpassed a $200B market cap?

Roy said...

TTM PE ratio is of limited use and misleading - I don't really pay a lot of attention to it. But forward PE-wise, by any measure, AAPL is very underpriced, and I think the realization is happening now!

Now, how do we get them to replace Alcoa with Apple in the Dow 30?

JavaJack said...

Roy, I enjoyed your comments, especially about Apple possibly exceeding Exxon. That would be cool. Yet today I read an analyst saying get out of Apple, it will fall, they all do. Well he's right, they have all fallen from grace at some point but I don't see Apple going the other direction for a long time.

Daniel Tello said...

javajack, Scott Moritz is an analyst??? Come on, you know no one takes that hit piece seriously, right? Just stop reading, it's full of crap.

JavaJack said...

Haha! Okay. I just get such a kick out of all the speculation. I guess it makes them money. Hey, how di d you see that article? You weren't reading were you? :-)

Daniel Tello said...

Nope. Read it on sanity.

Daniel Tello said...

Well, it took them seven weeks, but they finally did it!

Daniel Tello said...

And they f'd it up again! Amazing. Eight weeks now.

Daniel Tello said...

And it seems they fixed it. Took them 11 weeks.