AAPL Continuous Valuation Charts


Continuous Valuation Charts

These charts allow the application of technical analysis principles on valuation levels based on company earnings and free cash flow fundamentals.

What do I mean by “Continuous”?: Apple reports earnings every quarter.  However instead of simply using trailing 12 months (TTM) earnings as of the most recent quarter’s earning announcement, what if we thought of trailing earnings as something that is continuously increasing every day?  After all, Apple really is making money every day, with cash flow happening every day, and cash balances that change every day.  These charts represent that continuously increasing earnings.  I call this “Continuous P/E” (CPE).  I do the same with the Price to Free Cash Flow (FCF) ratio and FCF Net of Net Cash.  My blog posts will regularly reference and link to these charts, which are kept up to date regularly, usually weekly.

Continuous P/E (CPE)

Three charts:  (1) Weekly bars showing 5 years. (2) Weekly bars showing 3 years. (3) Daily bars showing 1 year.
(updated regularly – click for larger version)

Continuous Price/ Free Cash Flow (CP-FCF)

Two charts:  (1) Weekly bars showing 5 years. (2) Same, but showing FCF multiple Net of Net Cash
(updated regularly – click for larger version)

  4 Responses to “AAPL Continuous Valuation Charts”

  1. This is simply stunning. What great info for us all. Thanks!!!

  2. How do you determine future earnings? By Apple’s guidance?

    • I use a statistical model, the same one that produces the beat probability. It also produces an earnings estimate for the current quarter (next earnings release). It is based on data that Apple itself releases in its earnings announcements and in the investor section of their web site. It is not based on trying to predict the number of iPhones, iPads, and Macs will be sold, upon which most analysts base their estimates. It works off a higher level than that, and applies statistical analysis and trend computations. It is entirely objective without any subjective input. It will probably never be exactly right. That’s because earnings performance varies. But it does represent what is most likely based on statistics.