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 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 | 32.37 | 46.47 | 7.89 | 37.11% | $32.25 | $44.87 | 5.08% |
| Super Micro Computer Inc | 25.65 | 4.42 | 1.38 | 1.72% | $0.14 | $0.44 | 19.48% |
| Hewlett Packard Enterprise Co | 19.69 | 1.13 | 0.86 | -4.4% | $0.87 | $2.17 | 5.87% |
| Western Digital Corp | 21.86 | 4.30 | 1.44 | 5.86% | $0.28 | $0.91 | 30.94% |
| NetApp Inc | 18.82 | 20.55 | 3.39 | 33.42% | $0.43 | $1.19 | 3.84% |
| Pure Storage Inc | 145.32 | 14.51 | 5.83 | -1.1% | $0.04 | $0.54 | 12.26% |
| Eastman Kodak Co | 12.44 | 0.86 | 0.51 | -1.66% | $0.02 | $0.05 | -0.8% |
| Turtle Beach Corp | 19.46 | 2.40 | 0.80 | -0.55% | $0.0 | $0.02 | 14.42% |
| Average | 37.61 | 6.88 | 2.03 | 4.76% | $0.25 | $0.76 | 12.29% |
After a detailed analysis of Apple, the following trends become apparent:
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With a Price to Earnings ratio of 32.37, which is 0.86x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
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With a Price to Book ratio of 46.47, which is 6.75x 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 Price to Sales ratio of 7.89, which is 3.89x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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With a Return on Equity (ROE) of 37.11% that is 32.35% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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Compared to its industry, 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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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 is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.
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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Among its top 4 peers, Apple is placed in the middle with a moderate debt-to-equity ratio of 1.47.
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This implies a balanced financial structure, with a reasonable proportion of debt and equity.
Key Takeaways
For Apple in the Technology Hardware, Storage & Peripherals industry, the PE ratio is low compared to peers, indicating potential undervaluation. The PB and PS ratios are high, suggesting overvaluation relative to industry standards. Apple's high ROE, EBITDA, and gross profit signify strong profitability, while the low revenue growth implies slower expansion compared to industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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