diff --git a/flask/cli.py b/flask/cli.py
index 90eb0353..9dfd339f 100644
--- a/flask/cli.py
+++ b/flask/cli.py
@@ -55,10 +55,10 @@ def prepare_exec_for_file(filename):
     module = []
 
     # Chop off file extensions or package markers
-    if filename.endswith('.py'):
-        filename = filename[:-3]
-    elif os.path.split(filename)[1] == '__init__.py':
+    if os.path.split(filename)[1] == '__init__.py':
         filename = os.path.dirname(filename)
+    elif filename.endswith('.py'):
+        filename = filename[:-3]
     else:
         raise NoAppException('The file provided (%s) does exist but is not a '
                              'valid Python file.  This means that it cannot '
diff --git a/tests/test_cli.py b/tests/test_cli.py
index 0a479857..1e8feb02 100644
--- a/tests/test_cli.py
+++ b/tests/test_cli.py
@@ -19,7 +19,7 @@ from click.testing import CliRunner
 from flask import Flask, current_app
 
 from flask.cli import AppGroup, FlaskGroup, NoAppException, ScriptInfo, \
-    find_best_app, locate_app, with_appcontext
+    find_best_app, locate_app, with_appcontext, prepare_exec_for_file
 
 
 def test_cli_name(test_apps):
@@ -49,6 +49,13 @@ def test_find_best_app(test_apps):
     pytest.raises(NoAppException, find_best_app, mod)
 
 
+def test_prepare_exec_for_file(test_apps):
+    assert prepare_exec_for_file('test.py') == 'test'
+    assert prepare_exec_for_file('/usr/share/__init__.py') == 'share'
+    with pytest.raises(NoAppException):
+        prepare_exec_for_file('test.txt')
+
+
 def test_locate_app(test_apps):
     """Test of locate_app."""
     assert locate_app("cliapp.app").name == "testapp"