Apple in perspective

Since [Apple] rolled out the iPhone in 2007, its P/E has shrunk, notes Horace Dediu, a former telecom analyst at Nokia and founder of Asymco, a data-analysis firm in Helsinki. In 2007, Apple’s P/E based on the next 12 months of earnings was about 30; now it is about 12.8, compared with the S&P 500’s average of 12.5.

During that same period, Apple’s stock price has soared sevenfold—but its profits have increased by 1,200%.

One reason why Apple’s P/E is so reasonable, experts say, is that the technology sector is especially fickle, and investors are unsure of future profits. “This is a technology company in a world where technology changes quickly,” says John Goltermann, a portfolio manager at Obermeyer Asset Management in Aspen, Colo. “Now, it’s the incumbent, but that’s not necessarily going to be the case forever.”

Wall Street Journal. No one can predict the future value of Apple, and Apple’s fiscal year 2012 second quarter earnings will be announced next Tuesday after the markets close.

Disclosure: I am long AAPL.

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