apple_logo-512.png

From January 1, 1990 to September 12, 2019, Apple stock has returned roughly 20,208%, yes you read that right. In the same period, the S&P 500 returned roughly 751%. Building solid consumer products and offering terrific in-store experiences around the world seem to matter.
— Source: Stockcharts.com

COMPANY PROFILE

Take a look around your house. If you’re like me, there’s a handful of Apple products littered through your house and they are in high-demand. We have 3 iPads, 2 iPhones, 1 AppleTV, and 2 MacBooks. There are very few, if any brands that dominate multiple consumer product categories and hold >90% customer loyalty. Is there any wonder Apple is the most valuable company in America?

Consider some powerful facts:

  • > 1 billion iPhones have been sold since they were created.

  • iPhone loyalty is roughly 92% meaning >90% of current iPhone users will buy a new iPhone when they make the new purchase.

  • Apple has >1.4 billion active devices in use around the world. How’s that for a large installed base from which to get recurring service revenue for?

  • Apple now has $130 billion of net cash on the balance sheet making it the world’s most impressive cash flow generator.

  • In the latest quarterly earnings, Apple reported revenue of $84.3billion which means they generated roughly $936 million in sales every day, for 90 days.

  • Apple has a suite of high demand products for businesses and consumers: iPhone, iPad, iMac, MacBook, Apple Watch, Apple TV. HomePod, iPod Touch, Accessories for all, Apple Music, Earbuds, etc.

 

Recent Earnings

  • Quarterly revenue of $64 billion, an increase of 2 percent from the year-ago quarter.

  • Earnings per diluted share of $3.03, up 4 percent.

  • International sales accounted for 60 percent of the quarter’s revenue.

  • 80 of the largest retailers in the world are using Apple technology to enhance the customer experience.

  • Operating cash flow of $19.9 billion

  • We also returned over $21 billion to shareholders, including almost $18 billion in share repurchases and $3.5 billion in dividends and equivalents.

  • $260B in cash, retired $3billion of existing debt.

  • Net cash $98 billion.

  • Current guidance for its fiscal 2020 first quarter:

    • revenue between $85.5 billion and $89.5 billion

    • gross margin between 37.5 percent and 38.5 percent

    • operating expenses between $9.6 billion and $9.8 billion

    • other income/(expense) of $200 million

    • tax rate of approximately 16.5 percent

 

Opinion

From a factor scoring perspective versus the other 199 brands in the brands index, here’s where Apple scores well as of 9/17/19:

  • 85% high FCF yield

  • 88% strong price momentum

  • 90% high shareholder yield - shareholder benefits form of cash dividends, net stock repurchases, and debt reduction.

  • 88% high 3YR ROE

  • 92% accelerating sales growth 1YR vs 3YR average

  • 100% high absolute free cash flow

  • 98% high absolute sales

  • 88% high ROIC

10/31/2019 Comment:

Apple is truly the most impressive brand I have ever witnessed. They have a wildly loyal customer base, enormous brand recognition & relevancy, a significant amount of high demand products that appeal to kids through the elderly and in most countries around the world. That’s the definition of a Mega-Brand and no one should be surprised the company has a $1 trillion valuation. In my opinion this stock is the most important consumer staple on the planet and it’s going much higher as they introduce new products that resonate around the core iPhones. It’s a dividend growth machine so investors get a pay raise each year where the dividend is concerned. Active installed base is at an all time high. Customer satisfaction for iPhone is 99% in the last 2 phones.

Apple has been an extraordinary company that’s delivered long-term investors some staggeringly good returns. Services that surround the iPhone are the fastest growing part of the business now and those have meaningful room for growth with such an enormous installed base. Again, Apple is a strong dividend growth stock with stable and predictable earnings which isn’t so bad for the kind of market we currently have. They have so much cash to throw at so many potential new revenue opportunities that it’s hard to bet against them. All I hear is Apple has no room to grow, and they do not innovate yet the massive global installed base continues to buy more and more of their products. I love my earbuds and look forward to getting the new noise cancellation ear buds. There’s just nothing bad to say about this company, it’s a buy on every real dip.