In today's rapidly changing and highly competitive business world, it is imperative for investors and industry observers to carefully assess companies before making investment choices. In this article, we will undertake a comprehensive industry comparison, evaluating Apple (NASDAQ:AAPL) vis-à-vis its key competitors in the Technology Hardware, Storage & Peripherals industry. Through a detailed analysis of important financial indicators, market standing, and growth potential, our goal is to provide valuable insights and highlight company's performance in 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 | 38.61 | 57.36 | 9.40 | 35.34% | $31.03 | $43.72 | 9.63% |
| Western Digital Corp | 24.78 | 7.20 | 4.16 | 5.21% | $0.51 | $1.07 | 29.99% |
| Hewlett Packard Enterprise Co | 29.06 | 1.34 | 1 | 1.14% | $1.11 | $2.67 | 18.5% |
| Pure Storage Inc | 215.34 | 22 | 8.98 | 3.68% | $0.09 | $0.6 | 12.73% |
| Super Micro Computer Inc | 27.97 | 4.43 | 1.34 | 3.08% | $0.26 | $0.54 | 7.51% |
| NetApp Inc | 21.85 | 25.27 | 3.87 | 23.13% | $0.38 | $1.1 | 1.17% |
| Logitech International SA | 26.58 | 7.50 | 3.65 | 6.77% | $0.18 | $0.48 | 5.47% |
| Turtle Beach Corp | 16.06 | 2.67 | 0.93 | -2.47% | $0.0 | $0.02 | -25.76% |
| Average | 51.66 | 10.06 | 3.42 | 5.79% | $0.36 | $0.93 | 7.09% |
Upon analyzing Apple, the following trends can be observed:
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The stock's Price to Earnings ratio of 38.61 is lower than the industry average by 0.75x, suggesting potential value in the eyes of market participants.
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With a Price to Book ratio of 57.36, which is 5.7x the industry average, Apple might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.
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The stock's relatively high Price to Sales ratio of 9.4, surpassing the industry average by 2.75x, may indicate an aspect of overvaluation in terms of sales performance.
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The company has a higher Return on Equity (ROE) of 35.34%, which is 29.55% 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 $31.03 Billion, which is 86.19x above the industry average, indicating stronger profitability and robust cash flow generation.
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The company has higher gross profit of $43.72 Billion, which indicates 47.01x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company is experiencing remarkable revenue growth, with a rate of 9.63%, outperforming the industry average of 7.09%.
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.
In light of the Debt-to-Equity ratio, a comparison between Apple and its top 4 peers reveals the following information:
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As Apple is in the middle of the list in terms of the debt-to-equity ratio, it suggests that the company has a moderate debt-to-equity ratio of 1.54 compared to the other companies.
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This position indicates a relatively balanced financial structure, where the company maintains a reasonable level of debt while also leveraging equity for financing its operations.
Key Takeaways
For Apple, the PE ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest the market values the company's assets and sales highly. Apple's high ROE, EBITDA, gross profit, and revenue growth reflect strong financial performance relative to industry competitors. Overall, Apple appears to be attractively priced based on its earnings multiples, while also demonstrating robust profitability and growth metrics within the sector.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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