Apple Hits $1 Trillion in Market Cap
If you follow the financial news or watch CNBC at all, you likely saw that Apple hit a market cap (company value) of $1 Trillion today. They are the first US company to surpass this valuation, and it is a staggering number to think about.
Today, I wanted to analyze whether the company is a buy, hold or sell based on the current valuation. Of course, this is my opinion and should not be taken as financial or investing advice. Here is my analysis:
Apple has a price to earnings ratio (P/E ratio) of 18.74, while the S&P 500 has a current price to earnings ratio of 24.44, though the mean is 15.70. By this standard, Apple is fairly priced and could even go higher and still be reasonably valued. However, based on Apples forward guidance about future expectations, the forward P/E ratio is 15.24, which means that the company has room to continue to go higher. (a high P/E ratio could mean the company is overvalued)
Apple has a price to sales ratio of 3.91, while the S&P 500 is 2.24. Apple has a price to book value ratio of 8.71, which is higher than the S&P 500 of 3.41. By these metrics, Apple is more expensive than most companies, but that doesn’t necessarily mean it is a sell.
Apple has a dividend yield of 1.45%, while the S&P 500 has a dividend yield of 1.81%. By this metric, Apple is close to average, though Apple has the capacity to increase its dividend at a greater rate than the S&P 500, as they are currently paying out less than $3 per share, but making more than $11 per share. In the past, Apple has used this strong free cash flow beyond their dividend payments to increase their cash position and invest in growth opportunities/new technology.
I will stop the analysis here, as these are statistical numbers. Of course, there are non-statistical factors to consider before making an investment decision – such as the popularity of the products, changes to competition, the management of the company, potential buyback of stock, etc.
My opinion based on my analysis is that Apple is a “hold”.
I believe the stock is fairly valued, and has the opportunity to go higher, though I see downside risk as well. I feel the dividend is adequate, and expect it to grow bigger. I think the company is well run, and has lots of opportunities, though unmet expectations or slowing growth could have adverse results on the price of the stock.
What do you think? Is Apple a buy, hold or sell?
Brian
I think it depends what you're looking for. I'm a huge Apple fan and it's a substantial part of my portfolio. But I've bought at times when people are down on it. Now's not the time to buy. I'll probably pick up some more when it retraces its gain. I think it's a very well run company, and its service sector is really becoming a powerhouse to offset the flat phone sales.
Please do a post on Tesla. That stock is truly defying gravity and any sane analysis right now.
I agree with your take on Apple and congrats on being a holder... it has done well for you I am sure! Are you a Tesla fan or critic? My analysis may not be too kind! I would rather own Ford or GM as they will catch up to Tesla in the electric car market and Tesla’s valuation is really tough to justify...
When you say that Apple is a warehouse you mean? In my country there are many meanings of wineries I associate with selling I think Apple sells are famous worldwide although I do not know much about the subject
Happy night my friend
I'm a big fan of Apple as I think Apple is a hold. Apple is more expensive than most companies and they have most qualified products than the other companies. I'm really pleased for their great achievement. Thanks a lot sir @brian.rrr for the valuable market analysis.
If I lived in the US I would certainly have Apple in my portfolio. Their numbers and future are very good.
Hello my friend @ brian.rrr how are you? How are you all at home?
I am not very knowledgeable about the Appel theme, I even know a little about their products, they are very famous, they all want an iphone for many reasons and others do not, but I think it is something that sells a lot, they are always doing new things, so I think they do not stop selling.
Apple is a buy buy and buy @brian.rrr
Woow I just learned this news a great achievement here I think they have unique products without any doubt, we all want some apple object or accessory that has the apple
They sell a lot even though they have competition
A great analysis, I think that these types of companies have gusts and are some kind of fashion, so I would not invest in it.
apple is very beautiful products.i love apple products.
Nice inform . A great analysis but this companies is gust so invest is not better . Thanks for sharing @brian.rrr