Apple Inc. launch a new series of snapshots for the most searched companies on MarketWatch.
The quarterly review displays a comparison of the key metrics to track and the company’s most important issues to help the investor in deciding whether or not to own the stock.
The updates will include comparing results with competitors. Remember that no two companies are alike – not even competitors in every space. Any investor needs to do his own research to make sound long-term decisions.
Where Apple fits
Is the largest company in the world, by market capitalization, Apple
in contrast to the biggest “big tech” competitors – the company is still primarily a hardware maker, while others among the biggest tech companies are growing sales faster and faster. there are businesses that focus more on intellectual capital and services. But Apple’s Services category – which includes storage and backup services, digital content, and cloud payment services – is growing rapidly and is the second slowest reported business category.
Apple’s fiscal year ends on the last Saturday in September. So its fiscal first quarter ended December 26. Here are some of the most important numbers that professional investors keep an eye on the company and its competitors for.
The company reports its sales by product / service stream and geographically. With its focus on hardware, Apple’s business is highly seasonal, so sales in the December quarter accounted for 38% of sales in the last four reported quarters.
Here’s a comparison of sales by product / service category:
And according to geographic segment:
Apple’s biggest sales growth was in China. Sales for this segment accounted for 19.1% of the total for the December quarter, up from 14.8% a year earlier.
Power of pricing and profitability
Here’s an annual comparison of Apple’s gross and operating margins and five other major tech-oriented companies. Each company has a unique combination of business lines. This means that a direct comparison doesn’t make sense. Apple and Nvidia Corp.
mostly hardware companies. Facebook Inc.
is a service company. Microsoft Corp., Alphabet Inc.
and Amazon.com Inc.
have all succeeded in building the large, international cloud-services business of the company – but all three derive more revenue from other segments.
Below is a comparison of the sales growth, gross margins and operating margins for all six companies for the most recent reporting quarters and for the first quarters of the year.
A company’s gross profit margin is its revenue, minus its cost of goods sold, divided by its revenue. It is a measure of pricing power. Expanding gross margins with increased sales is a good sign. If gross margins are falling, it could mean that a company is being forced to increase its use of discounts to prevent competition. Comparing only two phases may not make special sense, but it is important to understand whether there is a trend or not.
Apple’s holiday quarter gross margins rose significantly year-on-year.
The operating profit margin of a company is the pre-interest income, taxes and amortization divided by net sales. It can be considered as “profit on sales.”
All listed companies expand their quarterly operating margins except for Amazon.
Free cash flow
With many companies’ businesses tied to intellectual property and services, some professional investors believe that focusing on cash flow may be more important in the modern economy than in the modern economy. traditional value measures, such as book price or even cost of income ratio. A firm’s free cash flow (FCF) can be calculated by dividing the FCF of the next 12 months by its current share price.
For Apple and the other five major tech companies being compared here, the FCF can fluctuate a lot from quarter to quarter.
Below is a comparison of the six firms’ changes in free cash flow per share over the past 12 months reported against the previous 12-month period, along with their 12-month free cash flow, based on per share price closed on April 16:
So Apple has come in second, behind Alphabet, in terms of FCF growth in the past 12 months. Apple has the highest FCF yield in this group.
Stock valuation and performance
Here’s the price-to-earnings (P / E) valuation for six stocks, based on consensus earnings estimates for the next 12 months among FactSet analysts polled by FactSet, along with total returns taken into account. April 16:
Apple has the second lowest forward P / E ratio. It has been the best performer in the group for three years and comes third for five years.
Wall Street Viewpoint
Here’s a summary of Wall Street analysts polled by FactSet:
Analysts working for brokerage firms love these stocks. But the industry’s price target for just one year, even though it is a relatively short period of time for a long term investor. So the price targets are not strong, despite the positive sentiment. Apple has the lowest “buy” or equivalent rating but the second highest implied increase in 12 months.
April 20 – Apple will announce new products.
April 28 – Apple releases its second quarter financial results after the market closes.