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Background and overview of Apple (AAPL)
For those who do not know Apple, the question is where have you been the past 15 years? Apple is famous for their electronic devices such as their Apple Mac laptop computers. But the device that was the real breakthru for Apple as company was the Apple Iphone. It is one of the best selling mobile devices in history. Apple not only focusses on phones and laptops. Their product range includes:
Apple is listed on the NASDAQ stock exchange
- Mac
- iPad
- iPhone
- Apple Watch
- Apple TV
- Apple Music (and offcourse the music download service called iTunes)
Apple is listed on the NASDAQ stock exchange
Scroll over or click on the funnel chart to get more details of AAPL's latest financial results (4th quarter ending September 2016)
Financial review:
Apple is sitting on a net profit margin of 19.24%. So essentially for every $100 they receive they make $19.24 in profits after paying all expenses and taxes. Pretty strong net profit margins considering the competitive environment they operate in with competition from the likes of Samsung. And what makes this even more impressive the net profit margin has improved from around 18.4% in their third quarter results to 19.24% in fourth quarter results.
Diluted earnings per share came in at $1.67 a share for the quarter (up from $1.42 a share in quarter 3 of 2016). This places AAPL on a PE ratio of 14.29 (if their earnings for 12months ended September 2016 is used). The PE is not very demanding for a company with such a strong brand name and customer loyalty. AAPL is currently sitting on a dividend yield of 1.84% (using dividends paid for the full 12 months ending September 2016). Investors are not likely to invest in AAPL if they are looking for strong dividend payouts as the yield is pretty low.
Diluted earnings per share came in at $1.67 a share for the quarter (up from $1.42 a share in quarter 3 of 2016). This places AAPL on a PE ratio of 14.29 (if their earnings for 12months ended September 2016 is used). The PE is not very demanding for a company with such a strong brand name and customer loyalty. AAPL is currently sitting on a dividend yield of 1.84% (using dividends paid for the full 12 months ending September 2016). Investors are not likely to invest in AAPL if they are looking for strong dividend payouts as the yield is pretty low.
Cash generated by operating activities for the 12 months amounted to $65,824million (or roughly $12.10 a shares). That makes it about $4 a share in cash generated from operating activities per quarter. Showing AAPL is a strong cash generative business. At the end of the 12months their cash and equivalents on their balance sheet was $20,4847million (or almost $4 a share is held in cash).
Pie chart shows revenue earned per region for AAPL:
Pie chart shows revenue earned per region for AAPL:
From the pie charts above it's clear that AAPL earns the majority of their revenue in the Americas (43.2% of revenue infact, up from 42.4% in 3rd quarter 2016 ). Europe brings in around 23% of revenue and China just behind Europe with about 18.8% of revenue for AAPL (China down from around 20% in 3rd quarter 2016). Below the pie chart shows revenue from the various products sold or services delivered
From the pie chart above it is clear that the iPhone is by far the biggest contributor to AAPL's revenue. As mentioned in our introduction this was the breakthru product for the company. 60.1% of fourth quarter revenue was made up by the sale of iPhones (up from 57% of revenue made up by iPhones in 3rd quarter 2016). All their other products including services made up the rest (around 40%). Interesting to note services is actually the 2nd biggest contributor to their third quarter revenues, bringing in 13.5%. How much smaller would AAPL have been if it was not for the iPhone?
Below we will take a look at a few of AAPL's financial ratios and then provide a valuation based on AAPL's current financial results.
Below we will take a look at a few of AAPL's financial ratios and then provide a valuation based on AAPL's current financial results.
A few financial ratios for AAPL (calculated using our Financial Ratios Calculator):
- Debt to Equity Ratio: 1.42 (more than 2 shows high levels of financial leverage).
- Current Ratio: 1.31 (A measure of liquidity. Less than one signals possible trouble in paying off current liabilities).
- Quick Ratio: 1.29 (Another liquidity measure. Shows how much in liquid assets is available to cover current liabilities or short term debt).
- Return on Assets (ROA): 2.55%
- Return on Equity (ROE): 6.61%
- Net Profit Margin: 18.41%
- Dividend Yield: 1.86%
Valuation:
Based on AAPL's current financial results we value them at between $122.11 and $122.25. We therefore feel that at it's current price it is close to being fully valued (but eager buyers can still jump in at the current price as its a few dollars below our valuation). AAPL is still a great company and investors currently holding it should continue to do so as we see no reason for selling. Those looking to buy should take advantage of any dips in the share price below the $122 a share. This valuation is up on our previous valuation on Apple (we valued them at $118), largely due to improved profits from AAPL in the 4th quarter compared to their 3rd quarter numbers.
For South African investors, please remember exchange rate movements will have an impact on the value of your AAPL shares when the value is calculated in Rand terms.
We use our Share Valuation Calculator as guide to valuing shares. We believe in value investing and our above mentioned share valuation is based on the underlying fundamentals and financial statements of the stock in question. Note this is not a binding valuation and investors should do their own research before investing in a specific share. Southafricanmi.com cannot be held liable for any losses incurred, We would accept donations on profits made though ;)
For South African investors, please remember exchange rate movements will have an impact on the value of your AAPL shares when the value is calculated in Rand terms.
We use our Share Valuation Calculator as guide to valuing shares. We believe in value investing and our above mentioned share valuation is based on the underlying fundamentals and financial statements of the stock in question. Note this is not a binding valuation and investors should do their own research before investing in a specific share. Southafricanmi.com cannot be held liable for any losses incurred, We would accept donations on profits made though ;)