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So far in 2022, Apple stock has outperformed its rivals. Shares are down only 15% YTD, while Alphabet is down 37%, Amazon is down 42% and Meta is down 72%.
Right now, the company has a market cap of 2.43 trillion dollars with 48 billion of cash including 25 billion in marketable securities.
For perspective, Apple’s market cap is bigger than the GDP of Canada.
Over the last 12 months, the company made 394.3 billion in revenue, 99.8 billion in net income and $6.11 cents earnings per share.
Revenue was up 7.8% year over year. Net income was up 5.4% and thanks to a strong buyback scheme, earnings per share increased 9%.
That means Apple stock is now valued at 6.4 times revenue and 25 times earnings. The company also pays a dividend of 0.6% and it repurchased $89.4 billion of its own stock in 2022.
In last week’s annual report Apple showed healthy product sales for 2022::
Iphone sales were up 7.2% to 206 billion
Mac sales were up 14% to 40 billion
Wearables were up 7.3% to 41 billion
Services were up 14% to 78 billion
And Ipad sales were down -8% to 29 billion.
Considering Apple’s dominance it's not surprising to see its stock outperform. Apple is also seen as a relative safe haven versus volatile growth stocks, bonds and foreign markets.
However, there are also risks to owning Apple stock.
US-China trade relations are disrupting Apple’s manufacturing. In one example the company has had to halt its plan to use China’s YMTC memory chips and tensions like these show no sign of easing.
Also, Apple’s PE ratio at 25, is still 30-40% above its long term average. That would be ok if Apple was growing quickly but as we saw Apple grew revenue only 7% in 2022 and net income only 5%. Apple will find it difficult to grow fast because of its size and new projects like electric cars seem risky. Furthermore, Apple’s sheer dominance will draw the attention of regulators.
That said, Apple maintains a strong brand and its earnings per share is supported by share buybacks.
So far in 2022, Apple stock has outperformed its rivals. Shares are down only 15% YTD, while Alphabet is down 37%, Amazon is down 42% and Meta is down 72%.
Right now, the company has a market cap of 2.43 trillion dollars with 48 billion of cash including 25 billion in marketable securities.
For perspective, Apple’s market cap is bigger than the GDP of Canada.
Over the last 12 months, the company made 394.3 billion in revenue, 99.8 billion in net income and $6.11 cents earnings per share.
Revenue was up 7.8% year over year. Net income was up 5.4% and thanks to a strong buyback scheme, earnings per share increased 9%.
That means Apple stock is now valued at 6.4 times revenue and 25 times earnings. The company also pays a dividend of 0.6% and it repurchased $89.4 billion of its own stock in 2022.
In last week’s annual report Apple showed healthy product sales for 2022::
Iphone sales were up 7.2% to 206 billion
Mac sales were up 14% to 40 billion
Wearables were up 7.3% to 41 billion
Services were up 14% to 78 billion
And Ipad sales were down -8% to 29 billion.
Considering Apple’s dominance it's not surprising to see its stock outperform. Apple is also seen as a relative safe haven versus volatile growth stocks, bonds and foreign markets.
However, there are also risks to owning Apple stock.
US-China trade relations are disrupting Apple’s manufacturing. In one example the company has had to halt its plan to use China’s YMTC memory chips and tensions like these show no sign of easing.
Also, Apple’s PE ratio at 25, is still 30-40% above its long term average. That would be ok if Apple was growing quickly but as we saw Apple grew revenue only 7% in 2022 and net income only 5%. Apple will find it difficult to grow fast because of its size and new projects like electric cars seem risky. Furthermore, Apple’s sheer dominance will draw the attention of regulators.
That said, Apple maintains a strong brand and its earnings per share is supported by share buybacks.
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NewsTranscript
00:00 Should you buy Apple stock? So far in 2022 Apple stock has outperformed its rivals.
00:06 Shares are down only 15% year to date while Alphabet is down 37%, Amazon is down 42% and
00:13 Meta is down 72%. Right now the company has a market cap of $2.43 trillion with $48 billion
00:20 of cash including $25 billion in marketable securities. For perspective Apple's market cap
00:26 is bigger than the GDP of Canada. Over the last 12 months the company made $394.3 billion in
00:32 revenue, $99.8 billion in net income and $6.11 earnings per share. Revenue was up 7.8% year over
00:41 year, net income was up 5.4% and thanks to a strong buyback scheme earnings per share increased 9%.
00:48 That means Apple stock is now valued at 6.4 times revenue and 25 times earnings. The company also
00:55 pays a dividend of 0.6% and it repurchased $89.4 billion of its own stock. In last week's annual
01:02 report Apple showed healthy product sales for 2022. iPhone sales were up 7.2% to $206 billion,
01:09 Mac sales were up 14% to $40 billion, wearables were up 7.3% to $41 billion,
01:16 services were up 14% to $78 billion but iPad sales were down 8% to $29 billion.
01:22 Considering Apple's dominance it's not surprising to see its stock outperform. Apple is also seen
01:27 as a relative safe haven versus volatile growth stocks, crashing bonds and foreign markets.
01:32 However there are also risks to owning Apple stock. US China trade relations are disrupting
01:37 Apple's manufacturing. In one example the company has had to halt its plan to use China's YMTC
01:43 memory chips and tensions like these show no sign of easing. Also Apple's PE ratio at 25 is still
01:50 30-40% above its long term average. That would be ok if Apple was growing quickly but as we saw
01:56 Apple grew revenue only 7% in 2022 and net income only 5%. Furthermore Apple's sheer dominance will
02:04 draw the attention of regulators. That said Apple maintains a strong brand and its earnings per
02:09 share is supported by buybacks. Assume that Apple grows earnings per share 10% a year for the next
02:15 10 years then trades at 25 times those earnings we get a share price of $396 in 10 years time.
02:23 That equates to an annualised return of roughly 10.5% per annum including dividends.
02:29 All in all Apple is clearly a quality company but it looks fairly valued. That's why I give
02:34 the stock a neutral rating and I do own shares in Apple. But these are my own personal opinions
02:39 not financial advice. For more detailed analysis visit our website.