It’s time to talk about one of the FAANG giants! Here is the breakdown on $AAPL, otherwise known as Apple.
Current Price: $127.14
52/Wk High: $138.79
52/Wk Low: $53.15
Dividend: $0.82 / 0.64% Yield
Market Cap: $2.2 Trillion
Read below for the breakdown!
Apple ($AAPL) is one of the largest designers and manufacturers of personal mobile and computer devices that are oriented toward the premium end of the technology market.
Digging into the numbers Apple delivered solid Q4 net sales across product segments;
iPhone: $26.444 Billion
Mac: $9.032 Billion
iPad: $6.797 Billion
Wearables/Home/Accessories: $7.876 Billion
Services: $14.549 Billion
According to Apple, iPhone sales declined on paper but the results were not comparable, and the 20.7% decline in iPhone net sales was due to a delay in the iPhone 12 release due to COVID-19.
Breaking down Apple’s stock price according to TREFIS (@trefis) data, 42.64% of the stock is based on Apple’s iPhone segment.
Furthermore, 23.64% is based on the Services, 14.95% Apple Watch, TV, and accessories, 7.78% on the Mac, 6.31% on the iPad, and 4.68% is based on cash.
Over the past few years, Services have been becoming more and more prominent, and many believe that soon, Apples leading business segment will be their services that span the Apple ecosystem.
Digging into the most recent quarter, Q4 2020, Apple beat expectations with an EPS of $0.73, better than the expected EPS of $0.70. Although, EPS did decline on a year over year basis by -3.95%.
As for sales, Apple reported total net sales of $64.698 billion, slightly better than the Q4 2019 level of $64.040 billion. Breaking down net sales, products accounted for $50.149 billion while services accounted for $14.549 billion.
On a year over year basis, product net sales declined $1.380 billion while services net sales increased $2.038 billion. Net income improved as well, coming in at $57.411 billion for FY 2020, better than the FY 2019 level of $55.256 billion.
Back on a quarterly basis, operating income totaled $14.775 billion, worse than the Q4 2019 level of $15.625 billion. Net income on the quarter declined also, landing at $12.673 billion, worse than the Q4 2019 net income level of $13.686 billion.
On a final earnings note below are net sales broken down by location.
Americas: $30.698 Billion
Europe: $16.900 Billion
Greater China: $7.946 Billion
Japan: $5.023 Billion
Rest of Asia Pacific: $4.131 Billion
In all, every sector segment increased beside China, which declined by $3.188 billion, leading investors to worry about Apple’s growth in China, which is very much important.
Shifting into the balance sheet the numbers are solid.
Total Debt: $113.097 Billion
Total Liabilities: $258.549 Billion
Total Assets: $323.888 Billion
Cash & Short Term Inv: $90.943 Billion
As for valuation Apple does trade at a sizable premium.
Price to Earnings: 39.43x
Price to Sales: 7.89x
Price to Book: 33.47x
Price to Cash Flow: 35.14x
Management has been rock solid, with leadership executing well.
Return on Equity: 73.69%
Return on Assets: 17.33%
Return on Invested Capital: 25.44%
Given the numbers, the analysts are mixed with a mean price target of $133.00/share, representing a 4.61% upside.
It is also important to note that the high price target is $160.00/share, representing a 25.85% upside, while the low price target is $80.00/share, representing a -37.08% downside.
The big money is also quite involved with 58.34% of Apple being owned by institutions. Top holders include Berkshire Hathaway, BlackRock Institutional Trust, and State Street Global Advisors.
On a technical basis, Apple could be presenting an opportunity. According to the six-month charts, the MACD is moving to the downside with minimal momentum within a range of 2.09 down to 1.25.
The six-month charts are also indicating an RSI of 48.08 and CCI of -80.16, both of which are on the lower end.
In short, Apple is a solid long-term pick with strong brand loyalty, a growing consumer base, and a growing services segment, but Apple must figure out iPhone sales and get back on track.
EAT - SLEEP - PROFIT
Disclaimer: This is not direct financial advice, simply an opinion based on independent research.