Apple Inc. designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. Based in Cupertino, CA, the large-cap Technology company has 164,000 full time employees. Apple has offered a 0.5% dividend yield over the last 12 months.
Growing Revenues With a Flat Capital Expenditure Trend:
| 2019-09-30 | 2020-09-30 | 2021-09-30 | 2022-09-30 | |
|---|---|---|---|---|
| Revenue (MM) | $260,174 | $274,515 | $365,817 | $394,328 |
| Gross Margins | 37.8% | 38.2% | 41.8% | 43.3% |
| Operating Margins | 24.6% | 24.2% | 29.8% | 30.3% |
| Net Margins | 21.24% | 20.91% | 25.88% | 25.31% |
| Net Income (MM) | $55,256 | $57,411 | $94,680 | $99,803 |
| Net Interest Expense (MM) | 1,385 | 890 | 198 | -106 |
| Net Interest Expense (MM) | $1,385 | $890 | $198 | -$106 |
| Depreciation & Amort. (MM) | -$12,547 | -$11,056 | -$11,284 | -$11,104 |
| Earnings Per Share | $2.97 | $3.28 | $5.61 | $5.89 |
| EPS Growth | n/a | 10.44% | 71.04% | 4.99% |
| Diluted Shares (MM) | 18,596 | 17,528 | 16,865 | 15,729 |
| Free Cash Flow (MM) | $58,896 | $73,365 | $92,953 | $111,443 |
| Capital Expenditures (MM) | -$10,495 | -$7,309 | -$11,085 | -$10,708 |
| Net Current Assets (MM) | -$85,209 | -$114,836 | -$153,076 | -$166,678 |
| Current Ratio | 1.54 | 1.36 | 1.07 | 0.88 |
| Long Term Debt (MM) | $91,807 | $98,667 | $109,106 | $98,959 |
| Net Debt / EBITDA | 0.74 | 0.94 | 0.74 | 0.74 |
Apple has growing revenues and a flat capital expenditure trend, strong margins with a positive growth rate, and a pattern of improving cash flows. The company also benefits from low leverage, wider gross margins than its peer group, and a strong EPS growth trend.
Apple Has Elevated P/B and P/E Ratios:
Apple has a trailing twelve month P/E ratio of 30.1, compared to an average of 27.16 for the Technology sector. Based on its EPS guidance of $6.58, the company has a forward P/E ratio of 26.9. Apple's PEG ratio is 3.03 on the basis of the 9.9% weighted average of the company and the broader market's EPS compound average growth rates. This suggests that the company's shares are overvalued. Furthermore, Apple is likely overvalued compared to the book value of its equity, since its P/B ratio of 48.69 is higher than the sector average of 6.23. The company's shares are currently trading 868.5% above their Graham number. Overall, Apple's lofty valuation in terms of earnings and assets is to some extent attenuated by its strong cash flow trend and reasonable levels of debt.
Apple Has an Analyst Consensus of Little Upside Potential:
The 39 analysts following Apple have set target prices ranging from $140.0 to $240.0 per share, for an average of $188.47 with a buy rating. As of April 2023, the company is trading -6.0% away from its average target price, indicating that there is an analyst consensus of little upside potential.
Apple has a very low short interest because 0.8% of the company's shares are sold short. Institutions own 61.2% of the company's shares, and the insider ownership rate stands at 0.07%, suggesting a small amount of insider investors. The largest shareholder is the Vanguard Group, Inc., whose 8% stake in the company is worth $252,081,299,564.
