Stock (Symbol) |
Apple (AAPL) |
Stock Price |
$165 |
Sector |
Technology |
Data is as of |
August 9, 2022 |
Expected to Report |
October 26 |
Company Description |
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Sharek’s Take |
Apple (AAPL) is expected to have slow profit growth for the forgeable future, which makes me think the company has matured. Analysts 9% profit growth this year, 5% next year, and 5% in 2024. Wow, that’s just 6% growth. That’s not much growth. It’s certainly not growth stock material, not in my book. LAst qtr the company delivered -8% profit growth on 2% revenue growth. In the end, it seems like this stock will be a slow grower for years to come.
Apple designs, manufactures and markets smartphones, personal computers, tablets, wearables. accessories, and related services. Services include advertising on its platforms, AppleCare technical support, as well as the App Store for customers to download applications and digital content such as books, music, games and podcasts. The company also offers payment services including a co-branded credit card Apple Card, and a cashless payment service called Apple Pay. Apple has recently made changes to its iOS 14.5 asking people if they want to opt-out of apple tracking them across the Internet, and this has hurt social media companies like Facebook as it made it harder for advertisers to track purchases. Here’s some AAPL stats from last qtr:
AAPL is a safe stock with an Estimated Long-Term Growth Rate of 10% a year, and a dividend yield of less than 1%. The low Est. LTG takes this out of the “growth stock” category for me. Management also buys back billions in stock. The company has reduced the share count 37% since 2013 (source: Squawk on the Street 11/17/21). Last qtr, management declared $0.23 cash dividend per share, payable in August this year, to shareholders. This was a 5% increase over last year. AAPL is part of the Conservative Growth Portfolio. This weakness the company is seeing might be short-term, as people spent a lot on computers the past two years. But for now, it seems like Apple has finally matured. |
One Year Chart |
![]() The Est. LTG of 10% is decent for a conservative growth stock, but its not the 20% growth I like for a traditional growth stock. Notice qtrly profit growth is poor. |
Earnings Table |
![]() Gross margin was down to 43.3% from 42.9% last year due to effects of seasonal cycle and unfavorable foreign exchange rates. Revenue slowdown was driven by supply chain constraints, foreign exchange headwinds, and high inflation. Despite these bad news, the company achieved all-time high in installed active devices and user engagements. Annual Profit Estimates have declined, this qtr. Note the top part of the Earnings Table is all green, and the bottom is mostly red. Qtrly Profit Estimates are for 7%, 0%, 0%, and 8% growth the next 4 qtrs. Management expects revenue to accelerate next quarter. In Products, the company expects lower supply constraints next qtr, but in Services management expects revenue growth to decelerate. |
Fair Value |
![]() Looking ahead, I feel this stock is worthy of a 25 P/E, which equates to $161. Note, since AAPL has a fiscal year-end of September 30th, we are now looking ahead to next fiscal year (2023) to calculate upside, or in this case downside. |
Bottom Line |
![]() Today’s Apple is more mature, and that means slower growth. Management kept blaming supply chain constraints in the earnings call. But Services revenue was 12% last qtr and is expected to slow this qtr. So in the end, this seems like a 10% grower, not the growth stock it used to be. AAPL slides from 6th to 20th in the Conservative Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio 20 of 36 |