Stock Valuation Report
I recommend a BUY rating on Apple (AAPL). Apple is on the rise and I don’t think it will slow down. The price of the share has gone down from $700 in September to $529.69 today. Assuming that one holds this stock until at least it hits its one year target of $775, a return of 46% on their investment is expected. More than a 40% return on investment is really good, and it will surely happen.
Business Summary
Apple (AAPL) is one of the world’s leading consumer electronics and personal computer companies. The Cupertino, California-based company was established in 1977 as Apple Computer Inc. It dropped the “Computer” from its name in early 2007.
Apple’s current place in the global marketplace is a far cry from its humble beginnings, with Steve Jobs, Steve Wozniak and Ronald Wayne selling hand-made personal computer kits in the late ’70s. The company continued to focus on personal computers for the following decades, but in recent years that focus has shifted more to consumer electronics such as the iPhone, iPad and iPod. However, Apple also sells a range of related software, services and applications, with some of the most prominent non-electronics products being the iCloud, iOS, Mac OS and Apple TV. In addition, the company sells and delivers digital applications and software through its iTunes Store, App Store, iBookstore and Mac App Store.
Apple has remained focused on developing its own hardware, software, operating systems and services to provide its customers with the best user experience possible. A significant fraction of the company’s efforts also go toward marketing and advertising as it believes such efforts are essential to the development and sale of its products
Apple’s Current Status
Despite the driving down of the Apple share price these pas months, the Company is offering more dividends to its shareholders.
According to Forbes, Apple is now one of the biggest dividend payers.
“Just days after its new iPad went on sale. Apple announced a $2.65 per share quarterly dividend March 19, representing $9.9 billion in annual dividend payments to shareholders and a 1.8% yield. The companies that follow were the biggest payers in the S&P 500 in 2011; only AT&T topped Apple’s projected payout.”
Apple has shown impressive improvements over the last year. Its operating margin has increased from 31% in 2011 to a solid 35% in 2012. Compared to IBM, one of Apple’s top competitors, which has an operating margin of 20% in 2012, Apple is doing very well. As operating margin goes, the higher the margin the better.
Apple’s profit margin is also increasing, meaning they are becoming a more profitable company that is gaining better control over its costs. In 2011, Apple showed a profit margin of 24%. In 2012, its profit margin was reported at 27%, giving them a 3% increase.
As mentioned by Forbes, Apple’s dividends had increased. Apple has a dividend yield of 2%, which not only keeps their stockholders happy, but gives them an edge of their competitor IBM.
A Look at the Past
As you can see, Apple has grown substantially over the last years. Revenues have increased from just over $32 billion in 2008 to over $156 billion in 2012. That is nearly an average of an increase of $29 billion per year.
The EPS has improved greatly over the past 5 years starting off with an EPS of 5.36 in 2208, and reaching 44.15 in 2012. EPS is so important because it is an indicator of a company’s profitability. Apple has shown a 69.41% increase in the last 5 years. Now is theTime to Buy
Apple’s recent correction in its stock price is a great entry point for investors. Apple remains the best value in tech–by far. Just compare its per-share growth in book value against similar measures at Amazon.com (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT), Google (NASDAQ: GOOG), and IBM (NYSE: IBM):
Conclusion
Apple is a very large company. It has hit hard in for this past 5 years, and continues to improve. Its operating margin has increase and is well over its competitor. It’s sales, total net income, and EPS have also increased over the past year. Its price share has dropped by a lot, and it’s dividend yield and book value per shared had increased, which make the company more attractive to invest to. Apple is growing, plain and simple, and has no sign of stopping any time soon. That is why I recommend BUYING this stock.
