Friday, January 16, 2015

Analysis of Apple 2015


Apple, an American technology and design company

Company: Apple

ISIN US0378331005 | WKN 865985

Business: An American technology and design company. They have products that they market very well. Their products are, in order of revenue: iPhone (around 100 billion USD), iPad (around 40 billion USD), Mac, iTunes and iPod. In 2015 their new product is an already presented Watch.

Active: World Wide

P/E: 17.0


Here you can find the previous analysis of Apple.

contrarian values of P/E, P/B, ROE as well as dividend for Apple

The P/E for Apple is a bit on the high side for me with 17.0 and so is the P/B with 6.0 which gives a clear no go from Graham. The earnings to sales are excellent with 25% and the ROE is spectacular with 35%! The book to debt ratio is also very good with 0.9.
In the last five years they have had an excellent yearly growth rate of 22.9% which gives us a motivated P/E of 45 to 50 which means that Apple is still undervalued on the market.
They pay a tiny dividend of 1.7% which however represents only 28% of their earnings so they should be able to keep that up. As a comment the earnings have been pretty much flat around 40 billion USD for the last three years now and it is not easy to even attempt to double or for that matter triple that value in the foreseeable future simply due to the size of it.

Conclusion: Graham gives a clear no and so do I. The P/E has simply become too high and the P/B is also too high for my liking with additionally a very low dividend payment. One must however admit that it is crazy how many billions they are earning each year and the margin they are able to have on their few products. Apple does not fit to me but they still deserve to remain on the Stocks of Interest list.

If this analysis is outdated then you can request a new one.

1 comment:

Fredrik von Oberhausen said...

I must say that the Q1 numbers from Apple are impressive! I did not think that it was possible to make such an earnings increase when the numbers were already so high.

So I take off my hat for Apple.