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Simple Conservative Valuation On Apple

Jan. 13, 2014 10:44 AM ETAAPL
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Seeking Alpha Analyst Since 2013

Value investor running a small investment firm in Borneo.

Apple EPS

Year EPS
2011 27.68
2012 44.15
2013 39.75
2014 39.75*

*Estimation on 2014 EPS.

To come up with a conservative 2014 EPS estimation, we ignored the general analyst consensus figure for 2014 EPS (around $42-$44) and used the 2013 EPS instead as our 2014 EPS estimation. That is to say we forgo the might of the new Iphone 5S/5C in our estimation as well as the much-hyped China Mobile deal and the various forecasts on increased earnings coming from China.


P/E EPS ($) Value ($)
13 39.75 516.75
15 39.75 596.25
17 39.75 675.75

Assuming EPS for 2014 to be close to our conservative estimation of $39.75 (That is to say no growth!), we get a value of $516.75 at P/E 13.
At a more realistic P/E of 15 and we get a valuation of $596.25.


Apple is currently trading at P/E 13.5 ($536.25) and that is basically saying the market is pricing Apple with no growth in earnings at all. Our conservative valuation gives a range between $516 - $596.25 (P/E 15) and with the share price currently at the lower end of it, we see a great business with competitive advantage and loyal customer base, strong balance sheet and a ~2.3% dividend yield. BUY

Disclosure: I am long AAPL, .

Additional disclosure: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article

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