Read This to Understand Apple Stock

Today we're going to take a closer look at large-cap Technology company Apple, whose shares are currently trading at $174.13. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!

Apple's Valuation Is in Line With Its Sector Averages:

Apple Inc. designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. The company belongs to the Technology sector, which has an average price to earnings (P/E) ratio of 27.16 and an average price to book (P/B) ratio of 6.23. In contrast, Apple has a trailing 12 month P/E ratio of 29.2 and a P/B ratio of 45.21.

Apple's PEG ratio is 4.35, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

The Business Has Operating Margins Consistently Higher Than the 21.41% industry Average:

2017-11-03 2018-11-05 2019-10-31 2020-10-30 2021-10-29 2022-10-28
Revenue (MM) $229,234 $265,595 $260,174 $274,515 $365,817 $394,328
Gross Margins 38.0% 38.0% 38.0% 38.0% 42.0% 43.0%
Operating Margins 27% 27% 25% 24% 30% 30%
Net Margins 21.0% 22.0% 21.0% 21.0% 26.0% 25.0%
Net Income (MM) $48,351 $59,531 $55,256 $57,411 $94,680 $99,803
Earnings Per Share $2.3 $2.98 $2.97 $3.28 $5.73 $6.11
EPS Growth n/a 29.57% -0.34% 10.44% 74.7% 6.63%
Diluted Shares (MM) 21,007 20,000 18,596 17,528 16,519 16,326
Free Cash Flow (MM) $76,676 $90,747 $79,886 $87,983 $115,123 $132,859
Capital Expenditures (MM) -$12,451 -$13,313 -$10,495 -$7,309 -$11,085 -$10,708
Net Current Assets (MM) -$112,627 -$127,239 -$85,209 -$114,836 -$153,076 -$166,678
Long Term Debt (MM) $97,207 $93,735 $91,807 $98,667 $118,719 $110,087
Net Debt / EBITDA 0.58 0.59 0.1 0.28 0.52 0.55

Apple has strong margins with a stable trend and a pattern of improving cash flows. Additionally, the company's financial statements display low leverage and a strong EPS growth trend. However, the firm has slimmer gross margins than its peers. Finally, we note that Apple has weak revenue growth and a flat capital expenditure trend.

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.

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