In today's rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. In this article, we will undertake an in-depth industry comparison, assessing Apple AAPL alongside its primary competitors in the Technology Hardware, Storage & Peripherals industry. By meticulously examining crucial financial indicators, market positioning, and growth potential, we aim to provide 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 | 33.09 | 47.50 | 8.07 | 37.11% | $32.25 | $44.87 | 5.08% |
| Super Micro Computer Inc | 26.49 | 4.56 | 1.42 | 1.72% | $0.14 | $0.44 | 19.48% |
| Hewlett Packard Enterprise Co | 20.43 | 1.17 | 0.90 | -4.4% | $0.87 | $2.17 | 5.87% |
| Western Digital Corp | 22.53 | 4.43 | 1.48 | 5.86% | $0.28 | $0.91 | 30.94% |
| NetApp Inc | 18.98 | 20.73 | 3.42 | 33.42% | $0.43 | $1.19 | 3.84% |
| Pure Storage Inc | 147.37 | 14.71 | 5.92 | -1.1% | $0.04 | $0.54 | 12.26% |
| Eastman Kodak Co | 12.60 | 0.87 | 0.52 | -1.66% | $0.02 | $0.05 | -0.8% |
| Turtle Beach Corp | 19.59 | 2.42 | 0.80 | -0.55% | $0.0 | $0.02 | 14.42% |
| Average | 38.28 | 6.98 | 2.07 | 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 33.09, 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 47.5, which is 6.81x 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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With a relatively high Price to Sales ratio of 8.07, which is 3.9x the industry average, the stock might be considered overvalued based on sales performance.
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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 Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $32.25 Billion is 129.0x above the industry average, highlighting 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 key indicator of a company's financial health and its reliance on debt financing.
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 examining Apple in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:
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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 high PB and PS ratios suggest that the market values Apple's assets and sales highly. Apple's high ROE, EBITDA, and gross profit reflect strong profitability, while the low revenue growth may indicate a need for strategic expansion to align with industry trends.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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