Evaluating Apple Against Peers In Technology Hardware, Storage & Peripherals Industry
This article evaluates Apple Inc. against its competitors in the Technology Hardware, Storage & Peripherals industry. It highlights Apple's premium pricing metrics, including a Price to Earnings ratio of 32.09, significantly above the industry average. Despite strong profitability indicators like a Return on Equity of 58.74% and EBITDA of $45.91 billion, Apple's revenue growth of 3.95% lags behind the industry average. The analysis suggests that while Apple maintains a balanced financial structure with a moderate debt-to-equity ratio of 1.45, its stock may be overvalued based on key financial metrics.
In the dynamic and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Apple AAPL and its primary competitors in the Technology Hardware, Storage & Peripherals industry. By closely examining key financial metrics, market position, and growth prospects, our aim is to provide 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 | 32.09 | 45.49 | 7.82 | 58.74% | $45.91 | $58.27 | 3.95% |
| Super Micro Computer Inc | 14.56 | 3.19 | 1.02 | 5.29% | $0.4 | $0.67 | 54.93% |
| Hewlett Packard Enterprise Co | 7.22 | 0.78 | 0.65 | 2.39% | $1.11 | $2.29 | 16.27% |
| NetApp Inc | 15.22 | 17.05 | 2.66 | 31.69% | $0.45 | $1.15 | 2.18% |
| Pure Storage Inc | 135.32 | 10.47 | 4.54 | 3.12% | $0.09 | $0.59 | 11.4% |
| Western Digital Corp | 10.38 | 1.03 | 0.79 | 4.89% | $0.96 | $1.52 | 41.33% |
| Eastman Kodak Co | 7.03 | 0.80 | 0.56 | 2.46% | $0.05 | $0.05 | -3.27% |
| Turtle Beach Corp | 14.29 | 1.85 | 0.62 | 18.11% | $0.03 | $0.05 | 46.76% |
| Average | 29.15 | 5.02 | 1.55 | 9.71% | $0.44 | $0.9 | 24.23% |
After thoroughly examining Apple, the following trends can be inferred:
The current Price to Earnings ratio of 32.09 is 1.1x 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 45.49 which exceeds the industry average by 9.06x.
With a relatively high Price to Sales ratio of 7.82, which is 5.05x the industry average, the stock might be considered overvalued based on sales performance.
The company has a higher Return on Equity (ROE) of 58.74%, which is 49.03% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $45.91 Billion, which is 104.34x above the industry average, implying stronger profitability and robust cash flow generation.
The gross profit of $58.27 Billion is 64.74x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.
With a revenue growth of 3.95%, which is much lower than the industry average of 24.23%, the company is experiencing a notable slowdown in sales expansion.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio measures the financial leverage of a company by evaluating its debt relative to its 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 light of the Debt-to-Equity ratio, a comparison between Apple and its top 4 peers reveals the following information:
As Apple is in the middle of the list in terms of the debt-to-equity ratio, it suggests that the company has a moderate debt-to-equity ratio of 1.45 compared to the other companies.
This position indicates a relatively balanced financial structure, where the company maintains a reasonable level of debt while also leveraging equity for financing its operations.
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.