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Stock Valuation and Analysis: Apple, Inc.

University of Phoenix FIN/571

October 24, 2017

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Stock Valuation and Analysis: Apple, Inc.

In today's ever-changing and rapidly growing economy, not too many companies can

consider themselves giants in their respective industries; Apple, Inc. does. Apple, Inc. is a

California based tech company that leads in the computer and cell phone industry. They are

pioneers in the telecommunications industry with products ranging from desktop computers to

personal music devices; however, their most significant success is the iPhone. Apple has a

market share of over $800 billion, and in 2015, Apple reported their highest revenue yet,

solidifying them the top spot in the cell phone industry. They also have higher than industry

average financial ratios, making them a smart choice to invest. Because they are such a tech

giant, they have been able to reward investors with high dividends and yields consistently.

Apple's current position has shown steady growth and a positive impact on the market making

them a smart investment. The following information is helpful in determining whether Apple,

Inc. is a good investment, and why?

Financial information and statistics for Apple Inc.

• Ticker symbol? AAPL

• Current Stock Price? 157.34 USD

• Market Cap? $809.598B

• Price to Earnings Ratio? 17.79

• Dividend and Yield? 1.5%

• Enterprise Value? $1.62 Trillion

• Apple 5 Beta? 1.18

• Was there a Stock Split? The company encocuntered a stock Split on a 7 in 1 in the year 2014

• What was the closing stock price for the last five days? $385.30
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• The 52 Week High for this stock? $399.82/$192.58

• The current Book Value per Share? 18.14

Rating for analysts recommendation. Strong Buy with an annualized Return of 23.52%

The following information is useful in understanding whether the provided information is

helpful or not. When referring to Stock price, it is the amount of money it will cost to purchase a

stock. The price of a stock is always fluctuating due to many different market factors. When

mentioning the price-earnings ratio, this is the ratio that measures the relationship between a

stock price for a company and the earning per share of the stock issued by that company.

Additionally, the price earnings ratio can indicate the willingness of the shareholders to pay for

every dollar of earnings. The market cap is a company's value representing all its outstanding

shares. This figure provides information about the value of the company's shares. The higher the

stock price, the larger the organization is; however, this is a common misconception. The stock

price is representative of the worth of the company. The market cap includes all the shares

outstanding of a company and determines a value based on the same. The Beta is used in

determining the price movement of a company's stock. It is a typical display of risk that should

help analyze the stock movements. Usually, shares that swing more will have a beta of more than

1, while a stock which moves less will have a beta of less than 1.

Apple's share had consistently grown since their inception into the tech industry back in

1980. The earnings per share(EPS), for Apple, is 8.81, which indicates a good return on

investments. Additionally, Apple does not only run on just cash flow, although their cash flow is

massive (operating CF of $64B & Free CF of $40B); Apple has investments in other areas which

show high return and great yields. Because Apple invests into many areas of their industry, they
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have large amounts of money vested into research and development. They are continually

looking for areas to improve and launch new and innovative products.

Apple is a highly profitable company. Their profit margin is over 40%, which makes

them a smart buy. Their profit margin is higher than the industry standard, which stands for high

possibilities of returns. Apple is continuously growing and searching for new ways to bring ideas

to life. As previously mentioned, Apple spends a significant amount of R&D (Research &

Development), allowing them to have an edge on their competition. Researching and Developing

new and innovative products has kept them at the top of their industry, which has resulted in a

constant stock price growth, higher than average dividends, and a robust cash flow.

Apple leads as one of the most sought-after investments due to their consistent growth in

the telecommunications industry. They have a strong financial position in the industry and see

constant growth of revenue and net income. Apple has a higher than the market beta of 1.39,

indicating that the stock has a firm price. Due to these factors, Apple's stock has less risk when

comparing it many of the other tech competitors in its industry. They also have a well-diversified

portfolio, helping them attract and retain a broad customer base. Apple's stock has shown

significant improvement over the past four years. In 2013, their share was trending below $60.

However, it is presently trading at levels of nearly $160, which is a strong indication that they

have had substantial growth in stock and that investors have increased their investment by three

folds in just under five years. The company also declares dividend quarterly regularly, and the

dividend yield of the company is 1.61%.

High market capitalization, enterprise value, dividend yield and positive analyst's

recommendations suggest that the stock is all set to perform well in coming periods. It is

expected that the average revenue of the company will also increase significantly and will be
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more than $265 million during next year, hence, the stock is recommended, and it is an excellent

investment opportunity for anyone looking to diversify their portfolio with a strong and long-

term tech company.

References

Ross, S.A., Westerfield, R.W., Jaffe, J., & Jordan, B.D. (2016). Corporate Finance (11th ed.).

Retrieved from The University of Phoenix eBook Collection database.

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Yahoo! Finance. (2017). NasdaqGS Real Time Price: Apple, Inc. Retrieved from

https://finance.yahoo.com/quote/AAPL?p=AAPL