APPLE ($AAPL) - Good Price or Good Company ? Rise / Fall Of FAANG ?
My afterthoughts to Tiger_chat 's question of whether an investor profits from a good company or a good price ?
"Why not both" I asked myself ?
Wouldn't there be more upsides comparatively speaking ?
Having put the theory to test on (1) Meta Platform, Snap, (2) Visa & Mastercard (3) Tesla, General Motors (4) Netflix (5) AMD, Lam Research, Intel and (6) JP Morgan & Morgan Stanley; time to try it on another FAANG stock no ?
Gonna put $Apple(AAPL)$ to the test & see if it fits the bill.
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- An American multi national technology company
- Founded on01 Apr 1976(46 yo company)
- Founders were Steve Wozniak,Steve Jobsand & Ronald Wayne
- Went public on12 Dec 1980at $22 per share
- The largest technology company by revenue (2021 - US$365.8 Billion in 2021)
- As of Jun 2022, it is the world's biggest company by market capitalization.
- It is one of the Big 5 American information technology companies, along side Alphabet (Google),Amazon, Meta(Facebook) and Microsoft.
- Apple became the first publicly traded US company to be valued at > $1 Trillion in Aug 2018, $2 Trillion in Aug 2020, and $3 trillion in Jan 2022.
- It is ranked as one of the world's most valuable brand.
In 2022, a year where US market has been hammered by extreme volatility and ease of covid pandemic restrictions - how did APPLE fare ?
Current stock price < 03 Feb 2022 stock price by -12.77%; tolerable !
Apple Summary
- Net sales (revenue) came in at $117.2 Billion vs vs $121.10 Billion (Refinitiv expected) vs $123.95 Billion (Q1 2022); thats a -5.45% decline.
- Net income came in at $30 Billion vs $34.63 Billion (Q1 2022); thats a -13.37% decline.
- Earnings per share (diluted) was $1.88 vs $2.10 (Q1 2022); thats a -10.47% decline
- Operating income came in at $36.0 Billion vs $41.49 Billion (Q1 2022); thats a -13.23% decline.
- The quarter was a stunning miss by Apple,
- Its Apple 1st earnings miss versus consensus expectations in almost 7 years.
- In fact, it was only its 2nd revenue miss since Aug 2017, with sales coming in more than 3% below expectations.
Apple - Revenue by Product
- Above please find illustrations depicting Sales / revenue by Category (product).
- In essence, APPL's revenue comes from its 5 core products; iPhone, iPad, Mac, Services and Wearables, Home & Accessories.
- Of the 5 core categories - only iPad (+30% - see below chart) & Services (+6%) registered a growth; remaining categories lost its footing especially the iMac (-29%); that is consistent with overall decline experienced by other PCs, laptops and chips makers.
Apple - iPad phenomenal growth in Q1 2023
Apple - Sales/ Revenue by 5 Core products
Please find full breakdown for Q1 2023 vs Q1 2022 :
- iPhone: $65.78 Billion (vs. $71.63 Billion)
- Mac: $7.74 Billion (vs. $10.85 Billion)
- iPad: $9.40 Billion (vs. $7.25 Billion)
- Wearables, home, and accessories: $13.48 Billion (vs. $14.70 Billion)
- Services: $20.78 Billion (vs. $19.5 Billion)
Apple - Sales by Country segment
- Overall drop in sales is not specific to a particular continent or region.
- Its just that in Year 2022, demand has been weaked throughout the year; not just in the US but world wide due to the covid complexities settling in.
- It is a general weakness experienced by all Tech stocks
Apple - Other Highlights
- Apple is a "cash rich" company with a healthy cash flow at $34 Billion
- However its operating expenses like other Tech and Financial stocks need to be better managed. In Year 2022, it has ballooned by +12% to $14.3 Billion.
- Other tech companies who saw 2022 inflated operating expenses includes - Meta Platform, AMD, General Motors etc...
Apple's CEO on Q1 2023 Results
As we all continue to navigate a challenging environment, we are proud to have our best lineup of products & services ever, and as always, we remain focused on the long term and are leading with our values in everything we do. During the December quarter, we achieved a major milestone and are excited to report that we now have more than 2 Billion active devices as part of our growing installed base.... Apple Inc, CEO, Tim Cook......
Is Apple Inc - Both A Good Price and Good Company ?
- There is potential upside to its stock price; given the current market situation
- The tri-factor that affected Apple's sales / revenue in 2022 were - (1) a strong US dollar, (2) production issues in China affecting the iPhone 14 Pro & Pro Max, and (3) overall macro economic environment
- China supply chain issue should ease with time given that China has lifted its internal & external restrictions
- With the latest interest hike at 0.25%, macro economic conditions in the US is also getting less "tense" compared to 2022.
- With the easing of interest hike, the strength of the US dollar will ease off as well. As of 03 Feb 2022, the Straits Times has also reported that the SGD dollar is at an all time high against the dip in the US dollar.
- Apple’s installed base has exceeded 2 Billion active devices, as confirmed by Tim Cook during today’s its Q1 2023 earnings call.
- CEO Tim Cook's opening remarks, revealed that just 7 years after passing one Billion active devices (2017), Apple has doubled that figure.
- Lastly, a focus on Services for revenue growth has paid off. It generated $20.8 Billion in revenue, a new all-time record said CFO Luca Maestri.
- Transactions processed through Apple Pay and subscriptions to things like Apple TV+ has been growing steadily.
- Apple have > 935 Million paid subscriptions across the Services on its platform.
- This is upped by > 150 Million during the last 12 months alone. And its nearly four times compared to year 2018... confirmed by CFO Luca Maestri....
- Do you think Apple now is the time to invest in Apple ?
- Do you think Apple is at good price point as well ?
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