Apple Is Now Cheaper Than It Has Been in 12 Years


Apple is cheap. It's a fact. Considering the massive 33% pullback that shares have seen over the past few months, combined with a rock-solid business, Apple's trading multiples have compressed further into value territory.

Earnings were relatively flat last quarter, but the company's P/E has still trended lower and is now just 10.66.

AAPL P/E Ratio TTM Chart
AAPL P/E Ratio TTM Chart

AAPL P/E Ratio TTM data by YCharts.

That's significantly cheaper than the S&P 500, and according to a recent Bloomberg report, we're talking about the biggest discount relative to the broader market in 12 years. By Bloomberg's estimates, Apple trades at a 29% discount to the S&P 500, a level not seen since December 2000.

At the same time, Apple has previously been proven to be disproportionately responsible for much of the market's earnings growth, highlighting how strange this discrepancy is. In fact, one technical analyst recently recommended a brave trade to capitalize on this divergence.

Oppenheimer's Carter Worth has recommended going long Apple while shorting the S&P 500 since the index has rallied significantly over the past few months while the Mac maker has gotten unjustifiably crushed. Worth believes the broader market has gotten ahead of itself and is set to pullback while Apple is due to bounce and head higher to approach $525.

The negativity surrounding Apple has reached a fever pitch, and that's dominated the minds of investors far more lately than the underlying fundamentals of the company. Analysts have toned down price targets on concerns of competition and margin compression, with Bloomberg pegging the median analyst price target at $613, down from $781 just five months ago.

That's still substantial upside from current prices and shows just how undervalued Apple has become in recent months -- so much so that investors are freerolling on numerous potential product introductions in the near future.

Will you take advantage of the biggest pricing discrepancy in Apple shares in a dozen years?

There's a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

The article Apple Is Now Cheaper Than It Has Been in 12 Years originally appeared on

Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.