It’s time to revisit a major FAANG name. Here is the break down of $AAPL, otherwise known as Apple.
Current Price: $133.58
52/Wk High: $145.09
52/Wk Low: $69.55
Market Cap: $2.2 Trillion
Read below for the breakdown!
Apple ($AAPL) is an iconic technology company offering best-in-class technology products such as the iPhone and Mac, while providing users with top-notch subscription services and an ease of use ecosystem.
Breaking down Apple’s stock price according to TREFIS (@trefis) data, 41.4% of the price is based on the iPhone segment.
Furthermore, below is a price analysis of $AAPL.
Apple Watch, TV & Accessories: 15.8%
Apple has been mostly flat, moving to the downside by over 5% throughout the past three months, leaving investors to wonder if the stock is a buy.
In recent news, Apple beat earnings expectations once again all the while announcing a strong 7% increase to the dividend and approving an increase of $90 billion to their share buyback program.
Furthermore, Apple recently committed $430 billion in US investments throughout the next five years, pledging to add 20,000 new US jobs and improve 5G innovation across nine states.
Digging into the numbers Apple beat Q2 2021 expectations with an EPS of $1.40, better than the analyst's EPS consensus estimate of $0.99. On a year-over-year basis, EPS improved by118.75%.
On the sales front, Apple reported net sales growth of 54% year-over-year, bringing Q2 total net sales to $89.584 billion.
Sifting into sales growth on a year-over-year basis by-product, iPhone sales increased by 65.5%, Services sales increased by 26.7%, Mac sales increased by 70.1%, and iPad sales increased by 78.9%.
Leadership noted that Mac sales were driven by the use of Apple's own M1 chip instead of Intel’s less superior processors.
Shifting into sales by segment, the Greater China segment experienced significant improvement with sales totaling $17.728 billion. For reference, the Q2 2020 Greater China sales totaled $9.455 billion.
Gross margin improved as well, totaling $38.079 billion for Q2 2021, much better than the Q2 2020 level of $22.370 billion. Furthermore, gross margin landed at 42.5%, a nine-year high and significantly better than the estimated 39.8%.
Operating income more than doubled, jumping to a strong $27.503 billion from $12.853 billion in Q2 of 2020.
Not only did operating income impress, but net income also more than doubled, totaling $23.630 billion for the quarter, significantly better than the Q2 2020 level of $11.249 billion.
On the costs front, total costs of sales landed at $51.505 billion, higher than the Q2 2020 level of $35.943 billion. Although this is to be expected, as it takes money to make money.
Shifting into the balance sheet the numbers are solid. (Q1 Levels)
Total Debt: $112.043 Billion
Total Liabilities: $287.830 Billion
Total Assets: $354.054 Billion
Cash & Short Term Inv: $76.826 Billion
On a valuation basis Apple does trade at a premium.
Price to Earnings: 36.11x
Forward Price to Earnings: 28.43x
Price to Sales: 7.49x
Price to Book: 34.16x
Price to Cash Flow: 17.90x
Management has been quite effective.
Return on Equity: 82.09%
Return on Assets: 18.41%
Return on Invested Capital: 27.80%
Given the numbers the analysts are bullish with a mean price target of $150.90/share, representing a 12.97% gain.
The high price target is $175.00/share, representing a 31.01% gain, while the low price target is $83.00/share, representing a -37.86% loss.
The big money is quite involved with 57.61% of Apple being owned by institutions. Top holders include The Vanguard Group, Berkshire Hathaway, and BlackRock Institutional Trust.
On a technical basis, Apple is solid. According to the six-month charts the MACD is moving with minimal upward momentum within a tight range around 2.4.
The six-month charts are also indicating an RSI of 64.7 and CCI of 102.28, both of which are on the high end.
In short, Apple ( $AAPL ) is a solid long-term investment with strong consumer loyalty, expanding sales, growing services, and an extremely reliable management team.
EAT - SLEEP - PROFIT
Disclaimer: This is not direct financial advice, simply an opinion based on independent research.