Apple stock analysis. AAPL stock.
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With a 2.7 trillion market cap, Apple is most likely the largest company in the world and the stock is up more than 60,000 since its IPO back in the 1980s.

The company also has 25 billion dollars in cash, 141 billion of short-term investments and 97 billion of long term debt. Which means the enterprise value is 2.63 trillion.

Revenue over the last 12 months equals 385 billion with 94 billion of net income and 98 billion of free cash flow. So based on recent figures, the company is valued at 6.8 times revenue, 29 times earnings and 27 times free cash flow.

That PE ratio has come down from its peak but it’s still a bit higher than the historical average. Prior to 2020, Apple’s PE ratio typically sat in the 10x to 20x range.

Looking at recent trends, you can see a company with modest growth, but improving margins.

Despite a year over year drop of 2%, revenue has grown roughly 68% since 2017. Meanwhile, operating profit has increased 83% and net income has grown 95%.

To understand this margin expansion, we can have a look at Apple’s changing revenue mix.

In 2017, Apple revenue was 87% derived from products like iPhones, iPads etc and 13% was derived from services like advertising and content).

Today, products has shrunk to 79% of total revenue and services has grown to 21% of the total.

Very simply, services are higher margin, so Apple’s growth in this area contributes to a much leaner business.

Apple has also proven an ability to raise prices. Warren Buffett recently said that customers would rather give up their second car than give up their iphone.

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