Apple is trading at 124 times ($316/$2.55) its earnings on May 11th , when it's PE ratio was only 66 back in January ($328/$4.99). The stock rallied up to $316, which is close to it's all-time high of $328 reached in March 2020 on Q4 2019 earnings of $4.99 per share. Q1 2020 earnings came in at $2.55 per share. This included only losses occurred in second half of March due to COVID. Major losses took place in April and May, which have not been priced in yet. How much should the stock be worth now? Q2 earnings may drop to $1.50, or lower, and then recover to $2.50 in Q3, if COVID situation improves. These earnings correspond to the price of $130 - $160.
評論:
What could explain this rally? Favorable conditions in the credit markets were supportive of stocks lately lifting both Nasdaq and SPX500 indices. Pricing in negative interest rates may be another driving force behind the stock rally, although not supported yet. Powell speech on Wednesday should bring more clarity.