In the fast-paced and highly competitive business world of today, conducting thorough company analysis is essential for investors and industry observers. In this article, we will conduct an extensive industry comparison, evaluating Apple (NASDAQ:AAPL) in relation to its major competitors in the Technology Hardware, Storage & Peripherals industry. Through a detailed examination of key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and illuminate 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 | 38.98 | 55.25 | 9.49 | 58.74% | $45.91 | $58.27 | 3.95% |
| Super Micro Computer Inc | 27.90 | 6 | 2.26 | 6.68% | $0.4 | $0.6 | 37.87% |
| Hewlett Packard Enterprise Co | 10.95 | 1.12 | 0.94 | 5.72% | $1.44 | $2.61 | 15.06% |
| NetApp Inc | 22.92 | 28.37 | 4.07 | 32.84% | $0.44 | $1.18 | 6.15% |
| Western Digital Corp | 19.86 | 1.97 | 1.51 | 4.89% | $0.96 | $1.52 | 41.33% |
| Pure Storage Inc | 166.85 | 15.05 | 7.53 | 4.44% | $0.11 | $0.58 | 8.94% |
| Eastman Kodak Co | 10.09 | 0.58 | 0.62 | 1.34% | $0.04 | $0.04 | -2.97% |
| Turtle Beach Corp | 58.29 | 3.56 | 1.07 | 3.3% | $0.01 | $0.03 | 59.51% |
| AstroNova Inc | 22.55 | 0.94 | 0.57 | 0.26% | $0.0 | $0.01 | 7.65% |
| Average | 42.43 | 7.2 | 2.32 | 7.43% | $0.42 | $0.82 | 21.69% |
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By thoroughly analyzing Apple, we can discern the following trends:
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The Price to Earnings ratio of 38.98 is 0.92x lower than the industry average, indicating potential undervaluation for the stock.
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It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 55.25 which exceeds the industry average by 7.67x.
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The Price to Sales ratio of 9.49, which is 4.09x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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The Return on Equity (ROE) of 58.74% is 51.31% above the industry average, highlighting efficient use of equity to generate profits.
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The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $45.91 Billion, which is 109.31x above the industry average, implying stronger profitability and robust cash flow generation.
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Compared to its industry, the company has higher gross profit of $58.27 Billion, which indicates 71.06x 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 3.95% compared to the industry average of 21.69%, which indicates a challenging sales environment.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio gauges the extent to which a company has financed its operations through debt relative to equity.
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 terms of the Debt-to-Equity ratio, Apple stands in comparison with its top 4 peers, leading to the following comparisons:
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In terms of the debt-to-equity ratio, Apple is positioned in the middle among its top 4 peers.
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This suggests a relatively balanced financial structure, where the company maintains a moderate level of debt while also utilizing equity financing with a debt-to-equity ratio of 1.45.
Key Takeaways
For Apple in the Technology Hardware, Storage & Peripherals industry, the PE, PB, and PS ratios indicate that the stock is relatively undervalued compared to its peers. However, the high ROE, EBITDA, gross profit, and low revenue growth suggest that Apple is performing well financially but may face challenges in revenue expansion. Overall, Apple’s strong profitability metrics outweigh the lower revenue growth, positioning it competitively within the industry sector.
This article was generated by Benzinga’s automated content engine and reviewed by an editor.
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