Andy Zaky

Steve Jobs' Health: A Red Herring

To: lostinvancouver

Interesting how you comment that the author knows apparently zero about stock valuation and then focus on the fact that Apple has a 35 trailing P/E for determining that the stock is implicitly over-valued. First of all, Apple grew earnings 47% this year. So the trailing P/E is justified.

Yet, even the stupid analyst understands that valuation is based on analyzing a stock's forward rather than its dated-trailing P/E.

Yet, those of higher intelligence understand even further that one shouldn't even really focus on Apple's P/E since a large portion of its revenue is deferred due to the iPhone subscription method of accounting. They realize that due to the subscription method of accounting, Apple generates large horde's of cash which aren't fully reflected in a P/E ratio, and that the analyst should probably focus on Apple's P/DCF.

But thanks for demonstrating your expert understanding of stock valuation based on looking at Apple's trailing P/E. The one number that no analyst really cares about.

A 25 forward P/E is not a steep valuation for a company that is generating large amounts cash from operations not figured into its income statement.