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 (NASDAQ: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 | 39.94 | 64.46 | 9.57 | 23.83% | $32.5 | $43.88 | 6.07% |
| Hewlett Packard Enterprise Co | 12.41 | 1.25 | 1.06 | 5.72% | $1.23 | $2.44 | 9.7% |
| NetApp Inc | 24.15 | 29.88 | 4.28 | 32.84% | $0.44 | $1.18 | 6.15% |
| Super Micro Computer Inc | 21.87 | 4.70 | 1.77 | 6.68% | $0.4 | $0.6 | 37.87% |
| Western Digital Corp | 78.10 | 2.11 | 1.66 | 4.28% | $0.86 | $1.55 | 48.91% |
| Pure Storage Inc | 166.46 | 15.08 | 7.51 | 4.44% | $0.08 | $0.54 | 8.81% |
| Eastman Kodak Co | 10.16 | 0.58 | 0.62 | 1.34% | $0.04 | $0.04 | -2.97% |
| Turtle Beach Corp | 59.87 | 3.66 | 1.10 | 3.3% | $0.01 | $0.03 | 59.51% |
| Immersion Corp | 4.82 | 1.21 | 1.71 | 13.41% | $0.03 | $0.06 | 1323.8% |
| AstroNova Inc | 18.94 | 1.30 | 0.80 | -0.34% | $0.0 | $0.01 | 14.12% |
| Average | 44.09 | 6.64 | 2.28 | 7.96% | $0.34 | $0.72 | 167.32% |
When closely examining Apple, the following trends emerge:
-
A Price to Earnings ratio of 39.94 significantly below the industry average by 0.91x suggests undervaluation. This can make the stock appealing for those seeking growth.
-
The elevated Price to Book ratio of 64.46 relative to the industry average by 9.71x suggests company might be overvalued based on its book value.
-
The stock's relatively high Price to Sales ratio of 9.57, surpassing the industry average by 4.2x, may indicate an aspect of overvaluation in terms of sales performance.
-
With a Return on Equity (ROE) of 23.83% that is 15.87% 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 $32.5 Billion, which is 95.59x above the industry average, indicating stronger profitability and robust cash flow generation.
-
With higher gross profit of $43.88 Billion, which indicates 60.94x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
-
The company is witnessing a substantial decline in revenue growth, with a rate of 6.07% compared to the industry average of 167.32%, 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.
By evaluating Apple against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations arise:
-
When compared to its top 4 peers, Apple has a moderate debt-to-equity ratio of 1.87.
-
This implies that the company maintains a balanced financial structure with a reasonable level of debt and an appropriate reliance on equity financing.
Key Takeaways
For Apple in the Technology Hardware, Storage & Peripherals industry, the PE ratio is low compared to peers, indicating potential undervaluation. The PB and PS ratios are high, suggesting overvaluation relative to industry standards. Apple's high ROE, EBITDA, and gross profit signify strong profitability, while the low revenue growth implies slower expansion compared to industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
