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He's not only underestimating last quarters EPS by about 50%, he's also taking the company's notoriously low guidance to extrapolate an estimate.
Oct 26 22:30 pm
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All Comments by thompr »Why Apple Is Worth $80 [View article]
Then he uses a multiple that is entirely inappropriate for the growth (which he doesn't notice is occurring) and he also doesn't properly account for cash.
Put it all together, and he is easily a factor of 4 off.
On Oct 26 04:24 PM Graham and Dodd Investor wrote:
> DOUBLE the author's starting earnings estimates for the reasons you
> mention, and use his other assumptions, and I get a price of $108
> instead of $54.
>
> You'd have to say that starting earnings are understated by FOUR
> TIMEs to get to the current stock price.