Apple Inc (AAPL:NASDAQ)

FUNDAMENTALS

Earning growth past 5 quarters

Earning growth past 3 years
Profit Margin
Expected growth next 3 years
EPS expected for 2018
Forward P/E Ratio
PEG Ratio

24%, 16%, 30%, 40%, 41%

>10%

> 25%

10-15%

11.91

15

1.0

  • Earning growth past 5 quarters

24%, 16%, 30%, 40%, 41%

  • Earning growth past 3 years

>10%

  • Profit Margin

>10-15%

  • Expected growth next 3 years

10-15%

  • EPS expected for 2018

11.91

  • Forward P/E Ratio

15

  • PEG Ratio

1.0

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PRICE TARGET AND POTENTIAL RETURN

PRICE TARGET 2018

195

PRICE TARGET 2020

258

%

POTENTIAL RETURN FROM FEBRUARY 9, 2018 LOWS

%

POTENTIAL RETURN FROM FEBRUARY 9, 2018 LOWS

ANALYSIS
  • Apple is a ‘ SLOW GROWTH’ and a ‘STABLE CASH FLOW’ stock.
  • It is difficult to value this stock based on the earning and sales growth only. Reason being, it is sitting on cash reserves sit of almost 285 billion dollars currently.If Apple decides to use this money to buy the outstanding shares at the current market price of 178, its ‘outstanding shares’ will decline by almost 1.6 billion to 3.4 billion.
  • Its market cap is currently at 890 billion dollars. Using its current ‘MARKET CAP’ as a fair value, its share price should be at $ 247.
  • Obviously, this calculation goes a step too far and makes significant assumption that Apple will use all its cash to buy the free stock.
  • This analysis should probably explain why the likes of Mr. Buffett are continuing to increase exposure to this stock. It is simply a ‘CASH COW’.
  • We have seen DCF- DISCOUNTED CASH FLOW’ METHOD as well. Results are the same but we find our method much more simples and fact based to arrive at the number.
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