Apple Inc (AAPL, Financial) has experienced a 0% daily change, a 3-month loss of 1.35%, and boasts an Earnings Per Share (EPS) of 6.12. This article aims to answer the question: is Apple (AAPL) fairly valued? We delve into a detailed valuation analysis of Apple, providing a comprehensive examination of its financial performance, growth prospects, and market position. Read on to understand the intrinsic value of this tech giant.
Company Introduction
Apple designs an array of consumer electronic devices, ranging from smartphones (iPhone), tablets (iPad), PCs (Mac), smartwatches (Apple Watch), to AirPods. In addition, Apple provides services such as Apple Music, iCloud, Apple Care, Apple TV+, Apple Arcade, Apple Fitness, Apple Card, and Apple Pay. Apple's products are distributed online, through company-owned stores, and third-party retailers. With a current stock price of $179.23 and a GF Value of $176.44, Apple appears to be fairly valued.
Understanding the GF Value
The GF Value represents the current intrinsic value of a stock, calculated based on historical multiples (PE Ratio, PS Ratio, PB Ratio, and Price-to-Free-Cash-Flow), a GuruFocus adjustment factor based on the company's past returns and growth, and future estimates of the business performance. If the stock price is significantly above the GF Value Line, it is overvalued, and its future return is likely to be poor. Conversely, if it is significantly below the GF Value Line, its future return will likely be higher.
Apple (AAPL, Financial), with a market cap of $2.80 trillion, is estimated to be fairly valued according to the GuruFocus Value calculation. This suggests that the long-term return of Apple's stock is likely to be close to the rate of its business growth.
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Financial Strength
Companies with poor financial strength pose a high risk of permanent capital loss. To avoid this, investors must review a company's financial strength before purchasing shares. Apple's cash-to-debt ratio of 0.55 ranks worse than 69.99% of companies in the Hardware industry. However, Apple's overall financial strength is 7 out of 10, indicating fair financial health.
Profitability and Growth
Investing in profitable companies carries less risk. Apple has been profitable 10 years over the past 10 years, with revenues of $383.30 billion and Earnings Per Share (EPS) of $6.12 in the past 12 months. Its operating margin of 29.82% is better than 98.13% of companies in the Hardware industry. Overall, Apple's profitability is strong.
Growth is a crucial factor in a company's valuation. Apple's growth ranks better than 65.95% of companies in the Hardware industry, with a 3-year average annual revenue growth of 15.7% and a 3-year average EBITDA growth rate of 20.9%.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) can evaluate its profitability. Apple's ROIC of 32.86 exceeds its WACC of 11.62, indicating that the company is creating value for its shareholders.
Conclusion
Overall, Apple (AAPL, Financial) stock appears to be fairly valued. The company's financial condition is fair, its profitability is strong, and its growth ranks better than 65.95% of companies in the Hardware industry. To learn more about Apple stock, check out its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
