Apple, Inc. Stock Analysis

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Apple, Inc. Stock Analysis Course Project: Apple, Inc. Stock Analysis 1. Apple Background with a lifetime analysis "Apple is a California corporation that was established in 1977. Apple is a company that designs, manufactures, and markets mobile communications and media devices, personal computers and portable digital music players. It is also a company that sells a variety of related software, services, accessories, networking solutions and third party digital content and applications.” iPhones, iPads, Mac, Apple Watch, Apple TV are some of products that the company sells through retail stores, online stores, direct sales forces and through third party cellular network carrier, wholesalers and valued-added retailers.…show more content…
Based on the DuPont method, ROE = Net profit margin * Asset turnover * Leverage = (100*(53,394/233,715)) * (233,715/290,479) * (290,479/119,355) = 22.85% * .80 * 2.43 = 44.74% Table 1 Compared to 2014, Apple ROE has increased from 35.42% to 44.74% due to the increase in financial leverage. We can just say that the rising increase in Apple ROE means that the company is able to generate profit without needing as much capital. Apple, Inc. ROE compared to its competitors is very high. In the table 1, we can see that Apple is the only company within its industry with that type of profitability and ROE. Even with the death of their founder and leader Steve Jobs, they were able to keep the company rolling with new products and innovations. 3. Apple’s projected future growth rate of earning Table 2 From table 2, we can see that Apple growth rate for the next 5 years. We are expecting a earnings increase of 7.06% over last year, 7.72% over 2016, 9.24% over 2017 and no increase over 2018. But overall, Apple is expecting an annual increase of 13.03% over the five-year period. 4. Analysis of Apple required rate of return using the CAPM measurement. Apple, Inc. Required rate of Return E(r) = rf + β [E(rM) – rf ] = .0292 + 1.09(.162 -.0292) = .0292 + .144752 = .173952 ~ .174 ~ 17.40% My calculation is based on Risk free rate= 2.92%, Beta= 1.09 and Market
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