The interpretation of what constitutes a “normal” or “fair” PE ratio depends on several factors. Companies with faster earnings growth, stronger competitive advantages, or lower risk typically command higher PE ratios. In contrast, slower growth or greater risk may result in a discount. As such, comparing Apple’s current PE to benchmarks is a key step in valuation.

Currently, Apple is trading at a PE ratio of 36.8x. This is above the U.S. tech industry average of 22.4x and also higher than its peer group average of 34.4x. Simply Wall St also calculates a proprietary “Fair Ratio” based on factors such as Apple’s expected earnings growth, industry, profit margin, market cap, and risk profile. This holistic figure for Apple is 38.3x, which presents a more nuanced perspective than a simple industry average.

The Fair Ratio offers a deeper perspective because it takes into account variables such as projected growth, market size, and business risks, providing a tailored benchmark rather than a single generic number. By comparing Apple’s current PE of 36.8x to its Fair Ratio of 38.3x, the stock appears to be fairly valued at current levels.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1439 companies where insiders are betting big on explosive growth.

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is a clear, user-friendly explanation that lets you connect the story you believe about a company, like Apple, with your expectations for its future revenue, earnings, and margins. This approach ultimately results in your own fair value estimate.

Narratives help you bridge the gap between headlines and hard numbers by tying your perspective on Apple’s business, strengths, and risks directly to financial forecasts. This makes investment decisions more dynamic and approachable. Rather than simply relying on static metrics, you can compare your calculated Fair Value to the company’s current price to decide when to buy, hold, or sell.

Accessible right now on Simply Wall St’s Community page, Narratives are used by millions of investors and are continuously updated whenever new reports, earnings, or news impact Apple’s outlook. This ensures your thesis stays relevant and fact-based. For example, some investors’ Narratives for Apple see its fair value as high as $281.75, reflecting confidence in long-term growth and innovation, while others land as low as $177.34, citing headwinds from tariffs, slowing growth, and industry competition.

For Apple, here are previews of two leading Apple Narratives:

🐂 Apple Bull Case

Fair Value: $281.75

Current valuation: 1.1% below this narrative’s fair value

Forecasted annual revenue growth: 7.0%

• Highlights sustained global expansion, an accelerating services ecosystem, and AI-driven product innovation as drivers of future growth, revenue stability, and higher margins.

• Points to strong analyst consensus on continued earnings growth, rising profit margins, and a steady reduction in shares outstanding, supporting the notion that Apple is fairly priced around current levels.

• Cautions that regulatory scrutiny, supply chain risks, and market maturation could challenge Apple’s ability to maintain its competitive edge and growth. However, overall forecasts remain optimistic based on execution and new product cycles.

🐻 Apple Bear Case

Fair Value: $177.34

Current valuation: 57.3% above this narrative’s fair value

Forecasted annual revenue growth: 14.7%

• Argues Apple’s stock is overvalued, citing a high PE ratio that is not supported by slowing growth and maturing product lines.

• Warns that pressures on profit margins, increased costs, and growing reliance on China create risks, especially as competition intensifies and growth in key segments slows.

• Suggests market optimism is excessive and could lead to a correction, with Apple’s investment in innovation and new products seen as insufficient to justify its premium valuation.

Do you think there’s more to the story for Apple? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include AAPL.

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