If Apple did so well in 2015, why is the stock suppressed at a price-to-earnings multiple of 11? Ultimately, because investors are worried the company’s revenue and EPS could be peaking. While there’s some merit to these concerns, as Apple is even guiding for low single-digit percentage year-over-year growth in revenue during Q1, these concerns don’t seem to appreciate the company’s recent execution.
Apple’s extraordinary growth in 2015 is obviously going to make comparisons in 2016 very tough. Following a year of 43% EPS growth simply isn’t easy. But just because the company may be positioned to post small, or even flat, revenue growth during 2016 doesn’t mean the stock deserves such a conservative valuation. The company’s incredible growth in 2015 should be appreciated as evidence of Apple’s clout with both existing and new customers. Further, investors should expect Apple’s revenue on a year-to-year basis to be volatile – this is a natural byproduct of the company’s focused portfolio of products.