Key takeaways:

• Thanks to its extraordinary rise to fame, and a share price that has soared over recent years, Apple is the world most valuable company

• The tech giant has regularly delivered positive earnings surprises 

• An overwhelming majority of analysts hold a favourable view of the iPhone manufacturer, with the stock attracting a mean rating of buy

Note: All figures in the following report have been sourced from Refinitiv, based on data available at June 20, 2023. For more information, sign up to Selfwealth Premium and gain access to hundreds of detailed stock reports on ASX and US-listed companies.Having made a profound impact on society by revolutionising the tech industry and introducing iconic creations like the Macintosh, iPod, and iPhone, Apple (NASDAQ: AAPL) is today the world most valuable company.

On the brink of bankruptcy in the late 1990s, Apple transformed itself into an innovative pioneer that is now arguably the most well-known brand in the world. Since that time, the company growth has been unparalleled. It became the first publicly-traded US company to surpass a US$1 trillion valuation, and is now closing in on a market cap of US$3 trillion. 

Every year the company brings in hundreds of billions of dollars in revenue thanks to its expansive line-up of smartphones, personal computers, tablets, wearables, and accessories. The tech heavyweight also generates revenue through its services division, which includes Apple TV+, Apple Music, Apple Pay, Apple Arcade, and other offerings.

Apple has built a loyal following of customers, with its iconic branding and market power at the centre of a global ecosystem that continues to expand into new industries and segments.

Apple Performance and Returns

Despite being a mega-cap stock, Apple has delivered significant returns over recent years. AAPL has yielded a 5-year return of 292%. Over the same period, the Dow Jones, S&P 500, and Nasdaq Composite have gained 38.7%, 59.5%, and 77.7% respectively.

Since listing on the stock market back in 1983, the company has rewarded shareholders with enormous gains in the order of tens of thousands of percent. Much of these gains followed the onset of the pandemic, at which point it became clear a digitised global economy was the way of the future.

More recently, AAPL shares are up 42.2% over the last 12 months, with the stock trading at a fresh all-time high. On one-month and three-month timelines, the stock has risen 7.5% and 18.7% respectively.

AAPL shares are currently trading 7.1% above their 50-day moving average of US$172.60, and 20.9% above their 200-day moving average of US$152.92.

Apple Key Investor Metrics

Despite the end of the pandemic bringing about a change to the stay-at-home practices that spurred growth in tech stocks, Apple delivered higher revenue in 2022. The company saw its sales reach US$394.3 billion last year, up from US$365.8 billion the year prior. 

Even the economic downturn has done little to dampen the company sales thus far. For the 12-month period ending April 1 2023, the company reported US$385.1 billion in revenue, representing a decline of just 0.2% year-over-year. 

Also highlighting the resilience of the company returns and its ability to convert equity into profits, Apple return on equity (ROE) is reported at 145.6%, which is among the highest of any company of this size.

For the latest 12-month period up till April 2023, the company gross margin was 43.2%, and its net margin was 24.5%. The latter is the highest within the Phones & Handheld Devices' industry. Another defining feature of the company based on the most recent annual statements is its inventory management, with days sales in inventory the lowest in its industry at just 9.9 days.

In terms of valuations, AAPL trades on a trailing price-to-earnings (PE) ratio of 31.4, and a forward price-to-earnings ratio of 29.4. The company price-to-sales (PS) ratio is currently 7.5-times. Each of these metrics are about one-quarter to one-third higher than the stock five-year average. 

By way of comparison, the S&P 500 trades on a PS ratio of 2.4, a trailing PE of 25.3, and a forward PE of 20. As such, AAPL commands a significant premium relative to the broader market. 

The gap when compared with Apple industry peers is far more narrow, with AAPL actually trading at discounts of 0.3% and 0.1% versus its peers when measured against the industry trailing and forward PE ratios respectively.

Apple Share Opportunities and Outlook

For the most part, Apple has surprised to the upside when delivering recent quarterly reports. When looking at the last 12 quarters of reports, the company delivered nine positive quarters, where earnings were more than 2% above the mean expectation of analysts. 

During the same period just one negative quarter was observed, as defined by a result where earnings were more than 2% below the mean expectation of analysts. And of course, there were two instances where earnings were in-line with analysts expectations.

In terms of the company outlook, analysts have recently soured on AAPL future earnings. Over the last four weeks there have been three downward revisions to earnings forecasts, with EPS cut by an average of 7.3%. This has been partially offset by one upgrade where the analyst hiked EPS by 2.4%. 

On an annual basis, the mean estimate for EPS is US$5.97 in 2023, followed by US$6.56 the year after. The range of estimates are far more narrow in 2023, with a low of US$5.43 and a high of US$6.29, which compares with US$5.61 and US$7.25 respectively for 2024. 

In 2022, EPS came in at US$6.11 per share, which suggests analysts see a slight contraction this year.

The mean estimate among analysts sees revenue falling in 2023 to US$384.7 billion, which is broadly in line with the 12-month figure as at the start of April. But in a sign that brokers expect Apple to bounce back following a potential recession, the mean estimate for revenue leaps higher in 2024 to US$409.9 billion, with a range between US$390.5 billion and US$428.8 billion.

Apple Key Risks

There are a number of risks associated with Apple, even when looking beyond the company lofty valuation.

The iPhone maker dependence on China for manufacturing is something that emerged as a risk late last year when coronavirus lockdowns weighed on shipments. While the specific headwinds associated with COVID may have passed, it is the firm concentrated production network that remains a supply chain risk.

More broadly, macroeconomic risks relating to the economy are something that Apple, like most tech companies, face. In particular, the prospect of a recession, at a time where industry smartphone demand is already subdued, has the potential to weigh on demand for high-end products like iPhones and Macs as customers tighten their spending. 

Meanwhile, regulatory risk, including antitrust scrutiny, follow the company given its size and status as a dominant player across a number of industries. 

Apple Share Dividends

Apple primary focus in rewarding shareholders over recent years has been capital growth, with share buybacks also a regular part of the company capital management strategy. 

Nonetheless, since it first declared a dividend back in 2012, the tech giant has steadily increased its quarterly payments to shareholders. It is one of just two companies within the Phones & Handheld Devices' industry that pays a dividend.

Since the end of 2020, Apple has hiked its dividend from a quarterly rate of US$0.21 per share to US$0.24 in the most recent quarter. The latest dividend is 4% higher than the preceding quarter, and marks the eleventh consecutive year in which the iPhone manufacturer has lifted its dividend.

All in all, Apple pays out just 16% of its earnings in dividends, with the company producing around US$100 billion of free cash flow per annum. While this suggests there could be scope for higher dividends into the future, the company currently spends tens of billions of dollars on share repurchases.

Period (Record Date)

Dividend (USD)

May 15, 2023

$0.24

February 13, 2023

$0.23

November 7, 2022

$0.23

August 8, 2022

$0.23

May 9, 2022

$0.23

February 7, 2022

$0.22

November 8, 2021

$0.22

August 9, 2021

$0.22

May 10, 2021

$0.22

February 8, 2021

$0.21

November 9, 2020

$0.21

Apple Analyst Ratings 

Apple is one of the most analysed stocks in the broker community, with 41 analysts providing coverage of the tech share. 

In total, the stock has attracted 10 ratings as a strong buy and 20 recommendations as a buy. On the other hand, 10 analysts rate the stock a hold, while just one broker has deemed AAPL a sell.

Despite the overwhelmingly positive view among analysts, over the last 120 days there have been three broker downgrades. There have also been two broker upgrades during this time.

At the time of writing, the mean 12-month price target for Apple is US$186 per share. This is broadly in line with the current trading price, with only 1.5% difference between the pair. Broker targets span between a high of US$220 per share, and a low of US$140 per share.