Tim Cook had big shoes to fill when he succeeded Apple’s Steve Jobs in 2011.
Fifteen years and a 2,700 per cent-plus share-price gain later (dividends included), John Ternus has inherited an equally daunting pair, taking over from Cook as Apple’s chief executive.
Wednesday’s launch of the foldable iPhone was Ternus’s first big event as chief executive, in the same Steve Jobs Theatre where Apple’s co-founder famously unveiled products with his trademark “one more thing” flourish. An engineer, Ternus is no Steve Jobs, but neither was Cook, and it didn’t do Apple shares any harm.
Apple was already vying with Exxon as the world’s most valuable company when Cook took over in 2011, with a market value of roughly $350 billion (€310 billion). Nvidia is the top dog these days, but Apple shareholders won’t complain, with its shares gaining nearly four times as much as the S&P 500’s 769 per cent over the same period.
Importantly, while revenues surged under Cook, from about $157 billion to an expected $477 billion in 2026, this was only one factor in Apple’s incredible share price run.
In 2011, Apple traded on 13 estimated earnings, compared to 33 today. Apple’s current price-to-sales ratio is 10, compared to less than four in 2011. Its current valuation is way above its 10-year average on multiple valuation metrics.
In other words, Apple shares have grown much faster than profits, with valuation expansion doing much of the heavy lifting.
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Ternus may have an easier job than Cook in one respect, since Apple is an exceptional moneymaking machine. However, a great company is not necessarily a great stock.
Cook benefited from a huge expansion in Apple’s valuation, but Ternus won’t have the same tailwind.
