Competitor Analysis: Evaluating Apple And Competitors In Technology Hardware, Storage & Peripherals Industry
This article analyzes Apple Inc. in the Technology Hardware, Storage & Peripherals industry, comparing it with competitors. Key metrics show Apple's high Price to Earnings (32.15), Price to Book (45.57), and Price to Sales (7.83) ratios, indicating potential overvaluation. However, its Return on Equity (58.74%) and EBITDA ($45.91 billion) are significantly above industry averages, reflecting strong profitability. Despite a revenue growth decline of 3.95%, Apple's balanced debt-to-equity ratio of 1.45 suggests a stable financial structure. Overall, while Apple shows strong profit generation, its high valuation metrics raise concerns for investors.
In the dynamic and fiercely competitive business environment, conducting a thorough analysis of companies is crucial for investors and industry enthusiasts. In this article, we will perform an extensive industry comparison, evaluating Apple AAPL in relation to its major competitors in the Technology Hardware, Storage & Peripherals industry. By closely examining crucial financial metrics, market position, and growth prospects, we aim to offer valuable insights for 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 | 32.15 | 45.57 | 7.83 | 58.74% | $45.91 | $58.27 | 3.95% |
| Super Micro Computer Inc | 14.40 | 3.15 | 1.01 | 5.29% | $0.4 | $0.67 | 54.93% |
| Hewlett Packard Enterprise Co | 6.87 | 0.74 | 0.62 | 2.39% | $1.11 | $2.29 | 16.27% |
| NetApp Inc | 15.42 | 17.27 | 2.70 | 31.69% | $0.45 | $1.15 | 2.18% |
| Pure Storage Inc | 133.06 | 10.29 | 4.46 | 3.12% | $0.09 | $0.59 | 11.4% |
| Western Digital Corp | 10.35 | 1.03 | 0.79 | 4.89% | $0.96 | $1.52 | 41.33% |
| Eastman Kodak Co | 7.06 | 0.80 | 0.56 | 2.46% | $0.05 | $0.05 | -3.27% |
| Turtle Beach Corp | 14.37 | 1.86 | 0.63 | 18.11% | $0.03 | $0.05 | 46.76% |
| AstroNova Inc | 15.88 | 0.66 | 0.40 | 0.26% | $0.0 | $0.01 | 7.65% |
| Average | 27.18 | 4.47 | 1.4 | 8.53% | $0.39 | $0.79 | 22.16% |
By conducting an in-depth analysis of Apple, we can identify the following trends:
The current Price to Earnings ratio of 32.15 is 1.18x higher than the industry average, indicating the stock is priced at a premium level according to the market sentiment.
It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 45.57 which exceeds the industry average by 10.19x.
The Price to Sales ratio of 7.83, which is 5.59x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
The Return on Equity (ROE) of 58.74% is 50.21% above the industry average, highlighting efficient use of equity to generate profits.
The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $45.91 Billion, which is 117.72x above the industry average, indicating stronger profitability and robust cash flow generation.
The company has higher gross profit of $58.27 Billion, which indicates 73.76x above the industry average, indicating stronger profitability and higher earnings from its core operations.
The company is witnessing a substantial decline in revenue growth, with a rate of 3.95% compared to the industry average of 22.16%, 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.
When assessing Apple against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:
Among its top 4 peers, Apple is placed in the middle with a moderate debt-to-equity ratio of 1.45.
This implies a balanced financial structure, with a reasonable proportion of debt and equity.
Key Takeaways
For Apple, the PE, PB, and PS ratios are all high compared to its peers in the Technology Hardware, Storage & Peripherals industry, indicating that the stock may be overvalued based on these metrics. On the other hand, Apple's high ROE, EBITDA, gross profit, and low revenue growth suggest that the company is efficiently utilizing its resources and generating strong profits, despite slower revenue growth compared to industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.