Investments and Portfolio Analysis FIN 5515
Professor Samique March-Dallas
Chapter 10 Stock Pitch Exercise
28 June 2021
Group 1:
Joi Robinson
Barbara McFarland
Nazara Henry
Wayne Barr
Chan-Erica Feacher
Chase Killette
Monisha Lanier
Stock Pitch: Apple Inc.
Research Company Background (Erica)
Apple Computers, Inc. was founded on April 1, 1976, by Steve Jobs and Steve Wozniak. Jobs and Wozniak wanted to make computers small enough for people to have them in their homes or offices. Apple is the frontrunner in the design and manufacturing of the mobile communication market.
What the company does (Barbara)
Market Cap
Apple’s market cap as of June 25, 2021, is $2221.29B
Apple’s market cap history and chart from 2016 to 2021
Stock Price (near high or low)
The latest closing stock price for Apple as of June 25, 2021, is $133.11. Apple’s stock price as of today at 2:09 pm is $134.84. This stock price would be considered high, due to the all-time high Apple stock closing price was 143.16 on January 26, 2021. The average Apple stock price for the last 52 weeks is 121.43. According to SEC documents, the Company’s stock price has experienced substantial price volatility in the past and may continue to do so in the future.
Revenue
Apple’s annual revenue for 2020 was $274.515B, a 5.51% increase from 2019. According to Statista.com, in the third quarter of the financial year 2020, Apple’s global revenue reached 59.69 billion U.S. dollars, a year-on-year growth of around 11 percent. This demonstrates Apple’s resilience in a time of challenge, as the coronavirus (COVID-19) pandemic caused economic recessions all over the world. America is Apple’s largest regional market and contributed to more than
45 percent of the firm’s sales in that quarter.
Growth Rates
Apple’s average growth rate is 3.58%. With the average growth rate being 3.58% we can expect annual revenue for the next year to increase to at least $284,344B.
Merits of the Company (Chase)
Apple released 4 new iPhone to the market in 2020 and during the holiday season the organization generated record revenue of $111 billion which helped Apple increase by 21% annually which resulted from 59% of iPhone sales (Verna,2021). Furthermore, Tim Cook CEO OF Apple concluded that Apple operations have installed over 1.5 billion devices recording that 1 billion are iPhones. Analysts have researched and identified that almost half of iPhone users haven’t had an upgrade in nearly 4 years, and believe that consumer upgrades to come will generate approximately $3 trillion in Apple’s market cap in the upcoming year (Verna, 2021).
Additionally, the service department of Apple is achieving all-time record revenue. Revenue recorded for the fiscal 2021 second quarter for Apple was $16.9 billion, up 27% recording the fastest rates in more than two years (Verna, 2021). Apple’s services include Apple
Music, the App Store, Apple TV, and more. Between these few services, Apple provides they generate gains from their 660 million paying subscribers.
Lastly, Apple has planned to buy back shares in their repurchase program, also adding $90 billion to the program (Verna, 20201). This is an indication of huge future projects that Apple believes will generate record-breaking revenue as their iPhones, and Apple’s services are during the present time. Apple is now focusing on moving into the automobile industry aiming for a 2023-2025 release time. In the end, investors are investing in Apple because of the continuing record-breaking numbers that they are obtaining.
Valuation (Monisha)
Apple Inc. (AAPL)
134.73+1.62 (+1.21%)
Valuation Measures
Current
3/31/202
12/31/202
9/30/202
6/30/202
3/31/202
1
0
0
0
0
Market Cap (intraday)
2.22T
2.04T
2.23T
1.97T
1.56T
1.10T
5
Enterprise Value 3
2.27T
2.07T
2.25T
1.99T
1.58T
1.10T
Trailing P/E
29.78
32.92
40.45
35.12
28.52
20.02
Forward P/E 1
25.00
28.49
33.44
30.12
24.33
19.65
PEG Ratio (5 yr
2.06
2.71
3.33
2.86
2.02
1.58
expected) 1
Price/Sales (ttm)
7.03
7.21
8.47
7.50
6.12
4.34
Price/Book (mrq)
32.11
30.78
34.16
27.20
19.93
12.28
Enterprise
6.99
23.15
20.22
30.69
26.44
18.88
Value/Revenue 3
Enterprise
22.03
65.87
61.11
108.89
95.15
66.00
Value/EBITDA 7
Financial Highlights
Fiscal Year
Fiscal Year Ends
Sep 26, 2020
Most Recent Quarter (mrq)
Mar 27, 2021
Profitability
Profit Margin
23.45%
Operating Margin (ttm)
27.32%
Management Effectiveness
Return on Assets (ttm)
16.90%
Return on Equity (ttm)
103.40%
Income Statement
Revenue (ttm)
325.41B
Revenue Per Share (ttm)
19.14
Quarterly Revenue Growth (yoy)
53.60%
Gross Profit (ttm)
104.96B
EBITDA
99.82B
Net Income Avi to Common (ttm)
76.31B
Diluted EPS (ttm)
4.45
Quarterly Earnings Growth (yoy)
110.10%
Balance Sheet
Total Cash (mrq)
69.83B
Total Cash Per Share (mrq)
4.18
Total Debt (mrq)
134.74B
Total Debt/Equity (mrq)
194.78
Current Ratio (mrq)
1.14
Book Value Per Share (mrq)
4.15
Cash Flow Statement
Operating Cash Flow (ttm)
99.59B
Levered Free Cash Flow (ttm)
80.12B
Trading Information
Stock Price History
Beta (5Y Monthly)
1.21
52-Week Change 3
47.17%
S&P500 52-Week Change 3
40.20%
52 Week High 3
145.09
52 Week Low 3
87.82
50-Day Moving Average 3
127.60
200-Day Moving Average 3
128.85
Share Statistics
Avg Vol (3 months) 3
84.18M
Avg Vol (10 days) 3
77.15M
Shares Outstanding 5
16.69B
Implied Shares Outstanding 6
N/A
Float
16.67B
% Held by Insiders 1
0.07%
% Held by Institutions 1
58.70%
Shares Short (Jun 15, 2021) 4
108.94M
Short Ratio (Jun 15, 2021) 4
1.52
Short % of Float (Jun 15, 2021) 4
0.65%
Short % of Shares Outstanding (Jun 15, 2021) 4
0.65%
Shares Short (prior month May 14, 2021) 4
94.75M
Dividends & Splits
Forward Annual Dividend Rate 4
0.88
Forward Annual Dividend Yield 4
0.66%
Trailing Annual Dividend Rate 3
0.82
Trailing Annual Dividend Yield 3
0.62%
5 Year Average Dividend Yield 4
1.34
Payout Ratio 4
18.34%
Dividend Date 3
May 13, 2021
Ex-Dividend Date 4
May 07, 2021
Last Split Factor 2
4:1
Last Split Date 3
Aug 31, 2020
Risks (Joi)
Though a technology behemoth, Apple stocks are no different from any other stocks and come with significant risks. One of the sources of the risks is near term as Apple as a “slowdown in the growth and penetration” in the smartphone market could be very costly to Apple as over “half of its sales” comes from iPhones (Zucchi, 2021). In addition, as most of the device is manufactured in China there is risk associated with penetrating that market. Another risk is that the company, which is synonymous with innovation, will be unable to develop its “innovative” strategy” in the future because it’s not investing in discovery(Zucchi, 2021).
Recommendation (Wayne)
Apple has experienced significant fiscal growth throughout its history. Forecasters have predicted that Apple’s stock price will rise by 18.76 percent over the next 12 months, to $134.73, based on a median estimate of forecasters. Other factors that came into play for the median estimate included:
A target median of $160.00.
A high estimate of $185.00.
A low estimate of $90.00.
A target median of $160.00.
Current Stock Price: $135.00
This increase demonstrates a significant gain that an investor should consider when deciding whether to buy, sell, or hold a security. Purchasing apple stock is recommended at this time because the company’s growth rate has remained consistent.
looking at the financial statement determine where management is allocating capital
The top 5 earners’ compensation
Tim Cook, Chief Executive Officer
Base Pay: $3,000,000
Bonus + Non-EquityIncentive Comp: $10,731,000
Stock Award Value: $0
Total Other: $1,038,259
Total Compensation: $14,769,259
Luca Maestri, Senior VP Chief Financial Officer
Base Pay: $1,000,000
Bonus + Non-EquityIncentive Comp: $3,577,000
Stock Award Value: $21,657,687
Total Other: $18,583
Total Compensation: $26,253,270
Jeff Williams, Chief Operating Officer
Base Pay: $1,000,000
Bonus + Non-EquityIncentive Comp: $3,577,000
Stock Award Value: $21,657,687
Total Other: $17,137
Total Compensation: $26,251,824
Deirdre O’Brien, Senior VP, Retail + People
Base Pay: $1,000,000
Bonus + Non-EquityIncentive Comp: $3,577,000
Stock Award Value: $21,657,687
Total Other: $37,684
Total Compensation: $26,272,371
Kate Adams, Senior VP, General Counsel and Secretary
Base Pay: $1,000,000
Bonus + Non-EquityIncentive Comp: $3,577,000
Stock Award Value: $21,657,687
Total Other: $14,310
Total Compensation: $26,248,997
Works Cited
Apple Inc. (AAPL) Valuation Measures & Financial Statistics. (2021, June 28). Retrieved June 28, 2021, from https://finance.yahoo.com/quote/AAPL/key-statistics/
Cable News Network. (n.d.). AAPL. CNNMoney.
https://money.cnn.com/quote/chart/chart.html?symb=AAPL.
SEC – Apple Documents,
www.sec.gov/Archives/edgar/data/320193/000032019318000145/a10-k20189292018.htm.
Salary.com. Salary Executive Compensation . 2021. 28 June 2021.
Vena, D. (2021, May 3). 6 Reasons to Buy Apple Stock and Never Sell. The Motley Fool.
https://www.fool.com/investing/2021/05/03/6-reasons-to-buy-apple-stock-and-never-sell/.
Zucchi, K. (2021, May 19). Investing In Apple: The Risks & Rewards. Investopedia. https://www.investopedia.com/stock-analysis/021815/investing-apple-risks-rewards-aapl.as px.