And its competitors are aggressive, slashing the prices of their products to appeal to consumers that hesitate to pay the higher prices Apple products demand. We also suspect that many customers are holding on to their phones longer than before, as premium devices are more than good enough for today’s needs (web browsing, streaming, and social media). Analogous to the decline of PCs, Apple faces the possibility of smartphone unit stagnation or even declines once emerging markets saturate or consumers gravitate to midtier devices. Should it be unable to innovate, Apple may lose its ability to charge premium prices for hardware that is no longer unique relative to devices from competitors. It’s typically categorized as a valuation metric and is most often quoted as Cash Flow per Share and as a Price to Cash flow ratio.
AAPL Bears Say
Berkshire began buying the stock in 2016 under the influence of Buffett’s investing lieutenants Ted Weschler and Todd Combs. Over the years, Buffett grew so fond of Apple that he increased the stake drastically to make it Berkshire’s biggest and called the tech giant the second-most important business after his cluster of insurers. Buffett had trimmed the Apple stake by 13% in the first quarter and hinted at the Berkshire annual Should i buy apple stock meeting in May that it was for tax reasons. To sell your Apple stock, return to your online brokerage platform, enter the ticker symbol, the number of shares (or dollar value) you want to sell and select a sell order type. These generally have the same names and work similarly to the order types we covered above. Prior to assuming the CEO position in 2011, when he succeeded Jobs, Cook was Apple’s chief operating officer (COO).
Analyst’s Opinion
However, like many technology companies, Apple had supply chain issues and labor disruptions throughout the pandemic. It’s no surprise that the company’s stock price hasn’t performed as well over the past year as many investors hoped. We believe Apple can leverage these qualities into continued economic profits over the next 20 years. We project 6% compound annual revenue growth for Apple through fiscal 2028.
- EPS is the amount of money each individual share of a company is worth, based on the company’s current profits.
- That makes the current valuation of 22 times operating earnings look a little expensive, though Buffett clearly believes the stock is undervalued.
- However, given the stock’s year-to-date performance coupled with lingering concerns around inflation, it tempting for investors to trim their existing positions and lock in some gains.
- Kat has expertise in insurance and student loans, and she holds certifications in student loan and financial education counseling.
- And like the P/E ratio, a lower number is typically considered ‘better’ than a higher number.
- The ever popular one-page Snapshot reports are generated for virtually every single Zacks Ranked stock.
Apple’s Strengths
A company with an ROE of 10%, for example, means it created 10 cents of assets for every $1 of shareholder equity in a given year. Seeing how a company makes use of its equity, and the return generated on it, is an important measure to look at. ROE values, like other values, can vary significantly from one industry to another. Return on Equity (or ROE) is calculated as income divided by average shareholder equity (past 12 months, including reinvested earnings).
Our Services
It operates within a number of industries keeping its edge with its product line, including computer hardware and technology, video streaming, and cloud computing. The Oracle of Omaha loves to make big bets on companies with strong brands, especially if those brands can produce high margins and keep growing over the long term. Apple earnings per share are seen rising 10.60% in fiscal https://investmentsanalysis.info/ 2024 and 11.23% in fiscal 2025, according to Zacks Investment Research’s analysis of 12 analysts’ forecasts. Where other companies have to spend substantial amounts of money on advertising, Apple can spend far less, plowing the difference into development of new products and services. Looking ahead, Apple’s stock forecast is promising, but it faces an increasingly competitive market.
For this reason, it’s probably more appropriate to call Apple stock a hold at this level. Investors, of course, should do their own due diligence to decide for themselves how attractive they think shares are. I’m talking about brand strength and the promise of Apple’s services business.
Experts generally regard Apple as a blue chip stock—investments with proven histories of steady growth and returns. Beyond the iPhone, Apple’s other key hardware products such as the iPad, Mac, Apple Watch, and AirPods each fill a computing niche that enhances the experience of the user. We do not foresee Apple’s primary electronic devices (smartphones, tablets, PCs, wearables, and “hearables”) becoming irrelevant.
All of this indicates that Apple is on track to deliver a solid set of results. More importantly, the tech giant is likely to sustain the high levels of growth, as it is at the beginning of a major upgrade cycle. On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
We also expect the firm to continue using R&D to trim costs and develop new features, especially by creating more cost-efficient semiconductors. © 2024 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided ‘as-is’ and solely for informational purposes, not for trading purposes or advice, and is delayed.
Whether or not to buy Apple stock at current levels is not an easy decision. The shares are not cheap, and the business faces headwinds from supply chain shortages and rising input costs. Since the pandemic’s onset, consumer demand has been incredible, but it could slow as higher inflation bites into people’s discretionary income. Apple is trading at a price-to-free-cash-flow ratio of 25.9 and a price-to-earnings ratio of 26.1. By those metrics, the stock is not cheap — but it’s not expensive either. Considering that over the last decade, Apple has transitioned more of its business to recurring revenue sales that produce higher margins, one can argue it justifies a higher price multiple.