Shares buyback plans are generally an indication that the company’s board of directors believes its stock is undervalued. Tim Cook took over the role of CEO in 2011 shortly before the death of Steve Jobs. Cook joined the company in 1988 as Senior VP of Global Sales and went on to become Executive VP of Global Operations before taking on the chief executive role. In his tenure, Mr. Cook has more than doubled Apple’s revenue and earnings while growing the company’s value by more than 450%. Founders Jobs and Wozniak, both college dropouts, founded the company with the idea of changing the way people looked at computers. Their vision coincided with a revolution within the PC industry and helped to create personal computing as we know it today.

Secondly, Apple’s product mix has been more favorable than previous quarters, with Apple nudging customers towards “Pro” versions of its devices, which likely have thicker margins. In fact, Apple raised the price of its iPhone 12 versus last year’s iPhone 11, making its iPhone 12 Pro models (priced at $1,000 and up) look like better value compared to last year. The net result is that we forecast Apple’s earnings per share for the next three years to grow to $4.10, $4.16, and $4.34. In February 2020, prior to the pandemic-driven market rout, Apple’s stock traded at $82 and the earnings estimate for 2020 was $3.46, resulting in a forward P/E ratio of 23.7 times. Since then, Apple’s stock has risen 60% to $131 and the current consensus estimate for 2021 earnings is $4.42, resulting in a forward P/E multiple of almost 30 times. The Projected Sales Growth (F1/F0) looks at the estimated growth rate for the current year.

Revenue has declined on a year-over-year basis in each of the last three quarters. While it has a small share of shipment volumes, its pricing power allows it to command more than 80% of the operating profits in the smartphone industry. And analysts believe the newest upgrade cycle’s demand is outpacing supply. It might be a smart idea to only invest in businesses that sell the best products and services.

Apple share dividends

A brief review of Apple’s fiscal third-quarter results quickly shows why investors piled into the stock following the earnings release. Not only did Apple crush analysts’ estimates, reporting 11% revenue growth when the consensus forecast was Get Backed for sales to decline 3% year over year, but growth in the tech company’s business was broad-based. This was an impressive feat for a quarter jam-packed with challenges and uncertainty — namely, store closures and a weak global economy.

Overall, it’s safe to say that Apple’s stock is not cheap, but no one can fault an investor willing to pay a premium price for a quality business. For the value-conscious investor, it may be prudent to wait for a pullback in the price before accumulating das trader shares. Apple’s price-to-earnings and price-to-free-cash-flow ratios are both 29, which falls on the pricier side compared to the company’s historical average. However, when viewed next to rival Microsoft, Apple is trading at a discount.

Growth traders and investors will tend to look for growth rates of 20% or higher. That does not mean that all companies with large growth rates will have a favorable Growth Score. But, typically, an aggressive growth trader will be interested in the higher growth rates.

Q3 Earnings Season Gets Underway

In contrast, the net income that goes into the earnings portion of the P/E ratio does not add these in, thus artificially reducing the income and skewing the P/E ratio. Our testing substantiates this with the optimum range for price performance between 0-20. Many investors prefer EV to just Market Cap as a better way to determine the value of a company. EBITDA, as the acronym depicts, is earnings before interest, taxes, depreciation and amortization. That means these items are added back into the net income to produce this earnings number. Since there is a fair amount of discretion in what’s included and not included in the ‘ITDA’ portion of this calculation, it is considered a non-GAAP metric.

Company Ownership

For perspective, the company has bought back an average of 5% of its stock each year over the last five years. So what are the key trends that are likely to drive Apple’s results? While Apple launched its latest iPhone 13 handsets in September, we don’t expect the device to be a major driver of Apple’s sales, as it was available for sale for just about a week in Q3. However, it’s possible that Apple could be seeing some pressure on device supply, due to the ongoing semiconductor shortage.

Reasons to Buy Apple Stock Right Now

The question remains of just how much one is willing to pay for exposure to this dominant company in their portfolio. Apple boasts a top-notch hardware lineup that includes the iPhone, which represented nearly half of overall company revenue in the most recent quarter (ended July 1), MacBook, Watch, AirPods, and iPad. Finder.com is an independent video game company stocks comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services.

A positive change in the cash flow is desired and shows that more ‘cash’ is coming in than ‘cash’ going out. Historical EPS Growth Rate looks at the average annual (trailing 12 months) EPS growth rate over the last 3-5 years of actual earnings. The Earnings Yield (also known as the E/P ratio) measures the anticipated yield (or return) an investment in a stock could give you based on the earnings and the price paid. The Price to Cash Flow ratio or P/CF is price divided by its cash flow per share. It’s another great way to determine whether a company is undervalued or overvalued with the denominator being cash flow.

In January 2022, Apple briefly hit a market value of $3 trillion, becoming the first company to reach that milestone. But it struggled to stay above that level and didn’t return to it until mid-2023. Critics on social media derided the new product as “nerd goggles.”

Investors who do buy shares now, therefore, may want to consider keeping the purchase very small as a percentage of their total portfolio. Then, if shares fall for one reason or another even as the company’s’ long-term growth prospects remain intact, investors might want to consider adding to their position. Apple’s stock is slightly expensive, with a price-to-earnings ratio of 31. The company’s solid growth history, recent product developments, and quickly expanding services business make it a no-brainer buy.

A strong weekly advance (especially when accompanied by increased volume) is a sought after metric for putting potential momentum stocks onto one’s radar. Others will look for a pullback on the week as a good entry point, assuming the longer-term price changes (4 week, 12 weeks, etc.) are strong. A stock with a P/E ratio of 20, for example, is said to be trading at 20 times its annual earnings. In general, a lower number or multiple is usually considered better that a higher one.

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