Apple Inc (AAPL, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $177.08, Apple Inc has witnessed a daily loss of 1.11%, marked against a three-month change of -4.21%. A thorough analysis, underlined by the GuruFocus Score Rating, suggests that Apple Inc is well-positioned for substantial growth in the near future.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Apple Inc's GF Score components are as follows:
- Financial strength rank: 7/10
- Profitability rank: 10/10
- Growth rank: 10/10
- GF Value rank: 5/10
- Momentum rank: 10/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in profitability, growth, and momentum, and a decent rank in financial strength, GuruFocus assigned Apple Inc the GF Score of 96 out of 100, which signals the highest outperformance potential.
Overview of Apple Inc's Business
Apple Inc, with a market cap of $2.77 trillion and sales of $383.93 billion, is a global leader in consumer electronics. The company designs a wide variety of devices, including smartphones (iPhone), tablets (iPad), PCs (Mac), smartwatches (Apple Watch), and AirPods, among others. In addition, Apple offers its customers a variety of services such as Apple Music, iCloud, Apple Care, Apple TV+, Apple Arcade, Apple Fitness, Apple Card, and Apple Pay, among others. Apple's products include internally developed software and semiconductors, and the firm is well known for its integration of hardware, software, semiconductors, and services. Apple's products are distributed online as well as through company-owned stores and third-party retailers.
Financial Strength Analysis
According to the Financial Strength rating, Apple Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure.
The Interest Coverage ratio for Apple Inc stands impressively at 29.86, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5.
With an Altman Z-Score of 8.34, Apple Inc exhibits a strong defense against financial distress, highlighting its robust financial stability.
With a favorable Debt-to-Revenue ratio of 0.29, Apple Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Apple Inc's impressive standing among its peers in generating profit.
Apple Inc Operating Margin has increased (16.83%) over the past five years, as shown by the following data: 2019: 24.57; 2020: 24.15; 2021: 29.78; 2022: 30.29; 2023: 31.19; .
Furthermore, Apple's Gross Margin has seen a consistent rise over the past five years, as evidenced by the data: 2019: 37.82; 2020: 38.23; 2021: 41.78; 2022: 43.31; 2023: 44.59; . This trend underscores the company's growing proficiency in transforming revenue into profit.
Apple Inc's strong Predictability Rank of 5.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Apple Inc demonstrates a strong commitment to expanding its business.
The company's 3-Year Revenue Growth Rate is 20%, which outperforms better than 85.93% of 2338 companies in the Hardware industry
Moreover, Apple Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 22.8, and the rate over the past five years is 17.4. This trend accentuates the company's continued capability to drive growth.
Conclusion
Given Apple Inc's strong financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential outperformance. This analysis underscores the importance of considering these key financial metrics when making investment decisions. With a GF Score of 96, Apple Inc stands out as a promising investment opportunity.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
