Market Analysis: Apple And Competitors In Technology Hardware, Storage & Peripherals Industry
This article analyzes Apple Inc. against its competitors in the Technology Hardware, Storage & Peripherals industry. It highlights Apple's strong financial metrics, including a high Return on Equity (ROE) of 58.74% and EBITDA of $45.91 billion, indicating robust profitability. However, Apple's Price to Earnings (P/E), Price to Book (P/B), and Price to Sales (P/S) ratios are significantly above industry averages, suggesting potential overvaluation. Despite strong profits, Apple's revenue growth of 3.95% lags behind the industry average of 24.23%.
In today's rapidly changing and fiercely competitive business landscape, it is vital for investors and industry enthusiasts to carefully evaluate companies. In this article, we will perform a comprehensive industry comparison, evaluating Apple AAPL against its key competitors in the Technology Hardware, Storage & Peripherals industry. By analyzing important financial metrics, market position, and growth prospects, we aim 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 | 30.84 | 43.72 | 7.51 | 58.74% | $45.91 | $58.27 | 3.95% |
| Hewlett Packard Enterprise Co | 7.15 | 0.77 | 0.65 | 2.39% | $1.11 | $2.29 | 16.27% |
| Super Micro Computer Inc | 13.87 | 3.03 | 0.97 | 5.29% | $0.4 | $0.67 | 54.93% |
| NetApp Inc | 15.06 | 16.87 | 2.63 | 31.69% | $0.45 | $1.15 | 2.18% |
| Pure Storage Inc | 133.10 | 10.30 | 4.46 | 3.12% | $0.09 | $0.59 | 11.4% |
| Western Digital Corp | 10.29 | 1.02 | 0.78 | 4.89% | $0.96 | $1.52 | 41.33% |
| Eastman Kodak Co | 6.78 | 0.77 | 0.54 | 2.46% | $0.05 | $0.05 | -3.27% |
| Turtle Beach Corp | 14.05 | 1.81 | 0.61 | 18.11% | $0.03 | $0.05 | 46.76% |
| Average | 28.61 | 4.94 | 1.52 | 9.71% | $0.44 | $0.9 | 24.23% |
After thoroughly examining Apple, the following trends can be inferred:
Notably, the current Price to Earnings ratio for this stock, 30.84, is 1.08x above the industry norm, reflecting a higher valuation relative to the industry.
With a Price to Book ratio of 43.72, which is 8.85x the industry average, Apple might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.
The Price to Sales ratio of 7.51, which is 4.94x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
With a Return on Equity (ROE) of 58.74% that is 49.03% above the industry average, it appears that the company exhibits 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 104.34x above the industry average, indicating stronger profitability and robust cash flow generation.
Compared to its industry, the company has higher gross profit of $58.27 Billion, which indicates 64.74x above the industry average, indicating 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 is an important measure to assess the financial structure and risk profile of a company.
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:
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.