2006-12-22 12:16:59 · 4 answers · asked by The economist 1 in Business & Finance ➔ Investing
High PE ratio and the level of risk has some corelation. Highly leveraged companies tend to have low number of stocks outstanding and thus high ROE and EPS. So Apple might be highly leveraged or it might be due to the value it adds to stock holders. I am not sure which one since I haven't watched Apple at all in my life though I have heard of it on a daily basis. They thrive on innovation and this might be the value impetues.
2006-12-23 03:59:13 · answer #1 · answered by Mathew C 5 · 0⤊ 0⤋
I am not an investor in Apple. I don't own an iPod, but I see a lot of very loyal Apple customers out there. PE is how much a shareholder is willing to pay for each dollar of Apple's earnings. If you think earnings will grow in the future, then you are willing to pay more for today's earnings. I have trouble seeing how Apple, which is already a $70 billion company, can continue to grow. Maybe I am wrong though - I never thought they would have the great run that they have had. But stocks can't go up forever. The big money has already been made on this stock.
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2006-12-22 16:35:35 · answer #2 · answered by Anonymous · 0⤊ 0⤋
The high P/E ratio for Apple does indeed correspond to risk. Owners of the stock are hoping that Apple will be able to increase the earnings to justify the price over time. If this happens, the P/E ratio will decline to be more in line with similar companies.
2006-12-22 12:21:50 · answer #3 · answered by oakhill 6 · 0⤊ 0⤋
Yes, its high P/E is rediculous. What does apple have besides the ipod? You can only make so many different variations of it. Bad stock for the future
2006-12-22 17:30:52 · answer #4 · answered by KaiserSoza1 1 · 0⤊ 0⤋