Why is Apple so cheap? The question baffles analysts and frustrates shareholders. The company exceeded estimates yet again, doubling earnings per share versus a year ago. But the stock only rose 6 per cent. Apple’s price/earnings ratio is still about 15 per cent less than the market overall.
Textbook explanations do not fit. Apple is not growing slower than companies with much higher multiples. And it has twice the returns of Google which is one-third more expensive.
Apple is one of the most analysed stocks on earth, so there must be a reason for the low market price. Two left-field hypotheses are worth considering.