Briefing From The Editor -- AAPL Stock

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.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.