Apple stock analysis. AAPL stock.
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With a 2.7 trillion market cap, Apple is most likely the largest company in the world and the stock is up more than 60,000 since its IPO back in the 1980s.
The company also has 25 billion dollars in cash, 141 billion of short-term investments and 97 billion of long term debt. Which means the enterprise value is 2.63 trillion.
Revenue over the last 12 months equals 385 billion with 94 billion of net income and 98 billion of free cash flow. So based on recent figures, the company is valued at 6.8 times revenue, 29 times earnings and 27 times free cash flow.
That PE ratio has come down from its peak but it’s still a bit higher than the historical average. Prior to 2020, Apple’s PE ratio typically sat in the 10x to 20x range.
Looking at recent trends, you can see a company with modest growth, but improving margins.
Despite a year over year drop of 2%, revenue has grown roughly 68% since 2017. Meanwhile, operating profit has increased 83% and net income has grown 95%.
To understand this margin expansion, we can have a look at Apple’s changing revenue mix.
In 2017, Apple revenue was 87% derived from products like iPhones, iPads etc and 13% was derived from services like advertising and content).
Today, products has shrunk to 79% of total revenue and services has grown to 21% of the total.
Very simply, services are higher margin, so Apple’s growth in this area contributes to a much leaner business.
Apple has also proven an ability to raise prices. Warren Buffett recently said that customers would rather give up their second car than give up their iphone.
#aaplstock #stocks #investing #stockstowatch
Join our newsletter for more: https://www.overlookedalpha.com
With a 2.7 trillion market cap, Apple is most likely the largest company in the world and the stock is up more than 60,000 since its IPO back in the 1980s.
The company also has 25 billion dollars in cash, 141 billion of short-term investments and 97 billion of long term debt. Which means the enterprise value is 2.63 trillion.
Revenue over the last 12 months equals 385 billion with 94 billion of net income and 98 billion of free cash flow. So based on recent figures, the company is valued at 6.8 times revenue, 29 times earnings and 27 times free cash flow.
That PE ratio has come down from its peak but it’s still a bit higher than the historical average. Prior to 2020, Apple’s PE ratio typically sat in the 10x to 20x range.
Looking at recent trends, you can see a company with modest growth, but improving margins.
Despite a year over year drop of 2%, revenue has grown roughly 68% since 2017. Meanwhile, operating profit has increased 83% and net income has grown 95%.
To understand this margin expansion, we can have a look at Apple’s changing revenue mix.
In 2017, Apple revenue was 87% derived from products like iPhones, iPads etc and 13% was derived from services like advertising and content).
Today, products has shrunk to 79% of total revenue and services has grown to 21% of the total.
Very simply, services are higher margin, so Apple’s growth in this area contributes to a much leaner business.
Apple has also proven an ability to raise prices. Warren Buffett recently said that customers would rather give up their second car than give up their iphone.
#aaplstock #stocks #investing #stockstowatch
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NewsTranscript
00:00 With a $2.7 trillion market cap, Apple is most likely the largest company in the world
00:05 and the stock is up more than 60,000% since its IPO back in the 1980s.
00:10 The company also has $25 billion in cash, $141 billion of short term investments and $97 billion
00:17 of long term debt which means the enterprise value is $2.63 trillion. Revenue over the last 12 months
00:23 equals $385 billion with $94 billion of net income and $98 billion of free cash flow. So based on
00:30 recent figures, the company is valued at 6.8 times revenue, 29 times earnings and 27 times
00:36 free cash flow. That P/E ratio has come down from its peak but it's still a bit higher than the
00:41 historical average. Prior to 2020, Apple's P/E ratio typically sat in the 10x to 20x range.
00:48 Looking at recent trends, you can see a company with modest growth but improving margins.
00:53 Despite a year over year drop of 2%, revenue has grown roughly 68% since 2017. Meanwhile,
00:59 operating profit has increased 83% and net income has grown 95%.
01:04 To understand this margin expansion, we can have a look at Apple's changing revenue mix.
01:09 In 2017, Apple revenue was 87% derived from products like iPhones, iPads etc and 13% was
01:16 derived from services like advertising and content. Today, products have shrunk to 79%
01:22 of total revenue and services has grown to 21% of the total. Very simply, services are higher
01:27 margins so Apple's growth in this area contributes to a much leaner business.
01:32 Apple has also proven an ability to raise prices. Warren Buffett recently said that customers would
01:37 rather give up their second car than give up their iPhone and Apple stock now represents
01:42 almost 50% of Berkshire's public portfolio. Let's assume a hypothetical scenario where
01:48 Apple maintains its historical earnings growth of 10% for the foreseeable future.
01:52 That would put net income at $245 billion in 10 years time and a 25 times multiple
01:58 puts the valuation at $6.1 trillion. Include dividends and the investment return works out
02:04 to around 9.3% a year. As usual, a key risk to owning Apple is whether the next iPhone is good
02:10 enough to sustain sales and whether the company can continue to navigate trade relations with
02:15 Chinese suppliers. That said, Apple is yet to make much of a splash in the realm of AI and
02:21 a development on that front could give the stock a short term boost. Overall, Apple may be the best
02:27 business in the world but the stock looks fairly priced and I give it a neutral rating. It's best
02:32 to get this stock on a dip. But these are my personal opinions not financial advice and I do
02:37 own some shares in Apple.