In today's rapidly changing and highly competitive business world, it is imperative for investors and industry observers to carefully assess companies before making investment choices. In this article, we will undertake a comprehensive industry comparison, evaluating Apple (NASDAQ:AAPL) vis-à-vis its key competitors in the Technology Hardware, Storage & Peripherals industry. Through a detailed analysis of important financial indicators, market standing, and growth potential, our goal is to provide valuable insights and highlight company's performance in 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 | 39.03 | 62.99 | 9.35 | 23.83% | $32.5 | $43.88 | 6.07% |
| Hewlett Packard Enterprise Co | 15.05 | 1.25 | 0.97 | 2.34% | $1.23 | $2.44 | 10.11% |
| Western Digital Corp | 80.21 | 2.17 | 1.70 | 4.28% | $0.86 | $1.55 | 48.91% |
| NetApp Inc | 22.59 | 27.95 | 4.01 | 32.84% | $0.44 | $1.18 | 6.15% |
| Super Micro Computer Inc | 16.25 | 3.49 | 1.32 | 6.68% | $0.4 | $0.6 | 37.87% |
| Pure Storage Inc | 122.68 | 11.95 | 6.15 | 2.52% | $0.08 | $0.54 | 10.91% |
| Eastman Kodak Co | 10.36 | 0.59 | 0.63 | 1.34% | $0.04 | $0.04 | -2.97% |
| Turtle Beach Corp | 55.84 | 3.41 | 1.03 | 3.3% | $0.01 | $0.03 | 59.51% |
| Immersion Corp | 4.98 | 1.25 | 1.77 | 13.41% | $0.03 | $0.06 | 1323.8% |
| AstroNova Inc | 18.30 | 1.26 | 0.78 | -0.34% | $0.0 | $0.01 | 14.12% |
| Average | 38.47 | 5.92 | 2.04 | 7.37% | $0.34 | $0.72 | 167.6% |
By analyzing Apple, we can infer the following trends:
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The Price to Earnings ratio of 39.03 for this company is 1.01x above the industry average, indicating a premium valuation associated with the stock.
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It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 62.99 which exceeds the industry average by 10.64x.
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The Price to Sales ratio of 9.35, which is 4.58x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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The Return on Equity (ROE) of 23.83% is 16.46% above the industry average, highlighting efficient use of equity to generate profits.
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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.
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Compared to its industry, the company has higher gross profit of $43.88 Billion, which indicates 60.94x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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The company's revenue growth of 6.07% is significantly below the industry average of 167.6%. This suggests a potential struggle in generating increased sales volume.
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.
By considering the Debt-to-Equity ratio, Apple can be compared to its top 4 peers, leading to the following observations:
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Apple holds a middle position in terms of the debt-to-equity ratio compared to its top 4 peers.
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This indicates a balanced financial structure with a moderate level of debt and an appropriate reliance on equity financing with a debt-to-equity ratio of 1.87.
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.
