Stock Valuation And Analysis: Apple Stock Success
Stock Valuation and Analysis Apple stock has been successful on Wall Street in the past. To look up the Apple Inc. stock you must look for their ticker symbol. According to Investing Answers (n.d.), “A ticker symbol -- also known as a stock symbol -- is a string of letters used to identify a stock, bond, mutual fund, ETF or other security traded on an exchange†(para. 1). For Apple Inc., the ticker symbol is AAPL which has four letters than the usual three or less and generally denote securities traded on the American Stock Exchange and Nasdaq.
Stock valuation and analysis are essential components of understanding a company's financial health and investment potential. Apple Inc., a leading technology company, offers an interesting case for such analysis due to its prominent market position and historical performance. The process involves evaluating various financial metrics and market indicators to determine the stock's current value and future prospects.
One of the first steps in stock analysis is identifying the company's stock symbol or ticker. For Apple Inc., the ticker symbol is AAPL, which is traded predominantly on the Nasdaq stock exchange. According to Investing Answers (n.d.), ticker symbols are short strings of letters, typically three or four, used to identify publicly traded securities. This symbol aids investors in tracking and trading the stock efficiently across different platforms.
Market Price and Capitalization
As of the most recent data available, Apple’s stock price stands at 172.97, reflecting an increase from a previous month when it was at 153.30. Over the past year, the stock’s high was 233.47, and the low was 142.0, indicating considerable volatility and potential growth opportunities. Market capitalization, which measures a company’s total market value of its outstanding shares, is a vital indicator of company size and investor confidence. Apple’s market cap has recently been valued at approximately 820.69 billion USD (The Motley Fool, n.d.). Such a high valuation positions Apple as one of the most valuable companies globally.
Beta and Volatility
The beta coefficient is a key metric that assesses a stock's systematic risk relative to the overall market. According to Investopedia (2019), a beta of 1 indicates that the stock's price moves in tandem with the market. Apple’s beta, calculated at 0.99 over a three-year monthly period, suggests that its price fluctuations are closely aligned with overall market movements. This information is crucial for investors seeking to manage portfolio risk, as stocks with betas near 1 tend to mirror broad market trends without excessive volatility.
Valuation Metrics: Price-to-Earnings Ratio and Dividend Yield
The price-to-earnings (P/E) ratio is an important valuation tool, representing what investors are willing to pay for each dollar of earnings. Apple’s P/E ratio of 14.32 indicates that investors are paying 14.32 times the company's earnings per share (EPS), reflecting perceptions of growth and stability. A lower P/E ratio might suggest undervaluation, while a higher P/E indicates high expectations for future growth.
Dividend yield, another significant metric, shows the cash flow an investor receives relative to the stock’s current price. Apple currently offers a dividend yield of approximately 1.7%, translating to an annual dividend of about $0.73 per share. This yield provides income for shareholders and signals Apple’s commitment to returning value to investors through dividends, alongside potential capital appreciation.
Enterprise Value, Stock Splits, and Book Value
Enterprise value (EV) offers a comprehensive measure of a firm’s total value, considering market capitalization, debt, and cash reserves. Apple's EV is estimated at 834.29 billion USD, indicating the total value of the company if acquired. It combines the company’s equity and debt obligations, minus cash on hand, offering a holistic view of its worth (Investopedia, 2019).
Apple has undergone several stock splits, which impact per-share metrics and investor perceptions. Since going public, Apple has split its stock four times, with the latest being a 7-for-1 split on June 9, 2014. Stock splits do not affect the overall market capitalization but can make shares more accessible to a broader investor base.
The book value per share, representing net assets per share, currently stands at 6.99 for the most recent quarter. This metric indicates the company's intrinsic value based on its assets and liabilities, offering insight into its financial stability and potential undervaluation or overvaluation conditions.
Current Analyst Views and Future Outlook
Financial analysts' opinions are vital for making informed investment decisions. Currently, consensus from approximately 32 analysts suggests a median target price of 175.00 USD for Apple, with highest estimates reaching 245.00 USD and lowest around 140.00 USD. This indicates a modest positive outlook, with some variability based on differing assumptions about future growth.
Revenue forecasts for Apple in 2020, according to analyst estimates, range from 10.62 to 14.49 USD per share, with a consensus of 12.90 USD. Recent news highlights include Apple’s plan to offer interest-free iPhone financing in China to boost sales, and rumors suggest that the release of a 5G iPhone might be delayed until 2020, factors that could impact stock performance and investor sentiment.
Conclusion
In conclusion, Apple Inc. remains a solid investment candidate based on its high market cap, steady stock performance, and strategic initiatives. The current valuation metrics support its position as a growth-oriented and income-generating stock. Investors should monitor market developments, product releases, and analyst forecasts to make well-informed decisions. The proposed valuation metrics, combined with recent company news, suggest that holding or gradually increasing exposure to Apple stock could align well with a balanced investment portfolio.
References
- Investing Answers. (n.d.). Ticker Symbol. Retrieved from https://investinganswers.com
- The Motley Fool. (n.d.). What Is Market Capitalization? Retrieved from https://fool.com
- Investopedia. (2019). Beta Definition. Retrieved from https://www.investopedia.com
- CNN Money. (2019). Apple Inc (NASDAQ: AAPL). Retrieved from https://money.cnn.com
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