In the last five years, shares of Apple (AAPL 0.50%) have more than tripled. That impressive gain trounces the 77% rise of the Nasdaq Composite Index.  

Key to this outperformance has been strong financial performance, but investors care about what the future holds, not necessarily what past returns looked like. 

So, is it possible for this FAANG stock, which carries a market cap of $2.7 trillion (as of Oct. 24), to double in five years? Let's see what it would take for this to happen, and if this is a realistic scenario. 

Strong earnings growth 

Between fiscal 2017 and fiscal 2022 (ended Sept. 24, 2022), Apple saw its revenue and diluted earnings per share (EPS) rise at compound annual rates of 11.5% and 21.6%, respectively. Wonderful fundamental gains like this certainly helped propel the stock price higher. 

But as we look toward the next five years, if the stock were to double, investors should expect the strong financial performance to continue. To be more specific, if Apple's price-to-earnings (P/E) multiple stays constant, the company's diluted EPS would need to double for the stock to do so as well between now and 2028. 

How likely is this? One thing is for sure: Apple's revenue growth prospects aren't as great as they were in prior years. The iPhone, which represents 48% of the overall business, is a mature product that depends more on price increases than gains in unit volume. Plus, with trailing-12-month revenue of $384 billion, the law of large numbers is catching up with this massive enterprise. 

However, the company has sizable growth in its services segment, which saw sales jump 8% in the third quarter (ended July 1). As offerings like Apple TV+, Music, Pay, and iCloud, for example, become bigger revenue drivers (they currently represent 26% of company sales), the business can also benefit from margin expansion. Services carry a stellar gross margin of 71%, much higher than products at 35%. 

Another important factor that can boost the EPS figure are share repurchases. Through the first nine months of this fiscal year, the company bought back $56.5 billion worth of its stock. Thanks to Apple's significant free cash flow, sizable repurchases are definitely on the table. A shrinking share count helps to increase EPS. 

Investors should be cautious 

It might not be hard to envision Apple's diluted EPS doubling in five years, but investors might want to temper their expectations as it relates to the P/E ratio. It's reasonable to assume that in 2028, this business will have fewer growth prospects than it does today because it will be more mature, and its market cap will likely be even higher. 

In this scenario, does the stock still deserve a P/E multiple of 29, which is what it carries today? Trying to predict the valuation ratio five years out is anyone's guess. But honestly, I think it's very likely that Apple's P/E will be lower in the future. 

For comparison's sake, in the last decade, the P/E has averaged 20.4. Should Apple's stock revert back to this average, it creates a 30% headwind for the share price. Consequently, diluted EPS would need to rise at an even faster clip to overcome this. 

To reiterate, Apple is a mature business these days, and unless there's a wildly successful new product launch that can meaningfully move the needle from a financial perspective, investors are better off limiting their optimism. A push into virtual reality and augmented reality, as well as a rumored car, might give some shareholders hope, but getting excited based purely on speculation isn't a sound strategy. 

Apple might have been a fantastic investment in the recent past, but I'm not so optimistic that the stock can double in the next five years.