Apple’s share price has enjoyed spectacular growth, even while much of the U.S. languished, but even at its current price it remains cheaper than most of mega-cap technology growth companies based on its earnings growth vs. its price-to-earnings ratio (PE).
This chart from Asymco below shows how Apple has a similar PE to its peers (bottom axis), yet has delivered far more earnings growth (left hand axis). Obviously, what matters for a buyer today is what future earnings growth will be, but at the very least Apple has a very good historical argument that it can deliver.
Despite its amazing stock market performance, Apple’s current valuation might not be too wild, due to the massive earnings growth it has achieved. The stock price has soared, but Apple has a far larger franchise underpinning its price than even just a year ago.
Here’s the data Asymco used:
(Tip via Abnormal Returns)