Furious attempts going on to figure out how to value Apple (AAPL). Do you slap a multiple of 8x earnings on it, which is what people are doing right now, valuing it the way that 9.5% grower historically is selling? Does that make sense? Does it make sense even though it is growing at 18%?
Google (GOOG), which has a 15% growth rate, under Apple's, trades at 13x earnings. That had been the level this whole thing started peaking at, using roughly $53 in earnings power.
But those days are past.
Do you value it on dividends? Back to the Intel 4% yield. Not helpful.
Ex-cash? Hasn't meant a thing.
Of course, if Apple would have an aggressive buyback, you could radically shrink the share count, boost the earnings and perhaps get a higher multiple. That's within the confines of what Apple can do.
Or is this peak earnings right here, right now? That might be why this stock can sell at a level that is equivalent to Microsoft (MSFT), and it is fairly valued.
The confusion here is that the stock is caught in the vise of growth going to value, in the throes of the last part, the last phase of that brutal process. If you bet that the company reacts with something to shrink share count or boost the dividend radically, you should be buying it right here, because that can interfere with the growth-to-value re-valuation process.
Otherwise, it has to overshoot to get where it can bottom, and remember, once it goes to "value" status, it cannot have animal spirits higher. They just don't do that anymore, as we know all too well from Intel, Microsoft and Cisco, the new cohort for Apple, the once-quintessential growth stock that is no longer allowed to have three straight misses and the first decline in earnings per share in 10 years.