In the ever-evolving and intensely competitive business landscape, conducting a thorough company analysis is of utmost importance for investors and industry followers. In this article, we will carry out an in-depth industry comparison, assessing Apple AAPL alongside its primary competitors in the Technology Hardware, Storage & Peripherals industry. By meticulously examining key financial metrics, market positioning, and growth prospects, we aim to offer valuable insights to investors and shed light on company's performance within the industry.
Apple Background
Apple is among the largest companies in the world, with a broad portfolio of hardware and software products targeted at consumers and businesses. Apple's iPhone makes up a majority of the firm sales, and Apple's other products like Mac, iPad, and Watch are designed around the iPhone as the focal point of an expansive software ecosystem. Apple has progressively worked to add new applications, like streaming video, subscription bundles, and augmented reality. The firm designs its own software and semiconductors while working with subcontractors like Foxconn and TSMC to build its products and chips. Slightly less than half of Apple's sales come directly through its flagship stores, with a majority of sales coming indirectly through partnerships and distribution.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Apple Inc | 31.96 | 45.88 | 7.79 | 37.11% | $32.25 | $44.87 | 5.08% |
| Super Micro Computer Inc | 26.63 | 4.58 | 1.43 | 1.72% | $0.14 | $0.44 | 19.48% |
| Hewlett Packard Enterprise Co | 19.66 | 1.12 | 0.86 | -4.4% | $0.87 | $2.17 | 5.87% |
| Western Digital Corp | 21.91 | 4.31 | 1.44 | 5.86% | $0.28 | $0.91 | 30.94% |
| NetApp Inc | 18.79 | 20.53 | 3.39 | 33.42% | $0.43 | $1.19 | 3.84% |
| Pure Storage Inc | 151.53 | 15.13 | 6.08 | -1.1% | $0.04 | $0.54 | 12.26% |
| Eastman Kodak Co | 11.77 | 0.81 | 0.49 | -1.66% | $0.02 | $0.05 | -0.8% |
| Turtle Beach Corp | 18.69 | 2.31 | 0.77 | -0.55% | $0.0 | $0.02 | 14.42% |
| Average | 38.43 | 6.97 | 2.07 | 4.76% | $0.25 | $0.76 | 12.29% |
When closely examining Apple, the following trends emerge:
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The stock's Price to Earnings ratio of 31.96 is lower than the industry average by 0.83x, suggesting potential value in the eyes of market participants.
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It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 45.88 which exceeds the industry average by 6.58x.
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The Price to Sales ratio of 7.79, which is 3.76x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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The company has a higher Return on Equity (ROE) of 37.11%, which is 32.35% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $32.25 Billion, which is 129.0x above the industry average, indicating stronger profitability and robust cash flow generation.
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Compared to its industry, the company has higher gross profit of $44.87 Billion, which indicates 59.04x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company is witnessing a substantial decline in revenue growth, with a rate of 5.08% compared to the industry average of 12.29%, which indicates a challenging sales environment.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio indicates the proportion of debt and equity used by a company to finance its assets and operations.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
When evaluating Apple alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:
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In terms of the debt-to-equity ratio, Apple is positioned in the middle among its top 4 peers.
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This suggests a relatively balanced financial structure, where the company maintains a moderate level of debt while also utilizing equity financing with a debt-to-equity ratio of 1.47.
Key Takeaways
For Apple in the Technology Hardware, Storage & Peripherals industry, the PE, PB, and PS ratios indicate that the stock is relatively undervalued compared to its peers. However, the high ROE, EBITDA, gross profit, and low revenue growth suggest that Apple is performing well financially but may face challenges in revenue expansion. Overall, Apple's strong profitability metrics outweigh the lower revenue growth, positioning it favorably within the industry sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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