Justin Sullivan
Apple (NASDAQ:AAPL) is the biggest company in the world, sporting a market cap of more than $3 trillion. There are some concerns, however, that the valuation is on shaky ground.
Demand for its newest iPhone devices, the 15 line that launched in September, is unknown so far. Services revenue — from Apple TV+ to iCloud — is smaller than device revenue but growing faster as the segment hits all-time sales records.
Apple (AAPL) is looking to China and India for future growth — and possibly moving more production to the latter from the former after supply chain disruptions and geopolitical trade tensions. How much real growth there might be in developing nations remains to be seen.
With a lofty valuation, whether or not Apple (AAPL) can hold onto its mantle as the world’s most valuable company in 2024 remains to be seen.
2023 stock performance
Apple has climbed 55% in 2023. Shares reached a 52-week high of $198.23 in the middle of the year but have hovered off that level since August. On Monday, the stock climbed about 0.8%, to close at $194.71.
Over a five-year timeframe, the stock has advanced more than 370%.
What quantitative measures say
Apple (AAPL) receives a Hold rating from Seeking Alpha’s Quant Rating system. This comes in large part due to an F grade in the category of valuation. The stock also receives a D for growth.
Countering this somewhat are high grades in other areas. AAPL receives an A+ for profitability and a B+ for momentum.
What Wall Street says
Analysts continue to have a bullish view of Apple (AAPL). Of the 45 analysts surveyed by Seeking Alpha in the past 90 days, 20 of them have a Strong Buy rating and eight have a Buy rating.
Still, there are some skeptics. Two analysts give Apple a Sell rating while another sees it as a Strong Sell. Meanwhile, 14 analysts have a Hold rating.
Looking at one of the company’s detractors, Seeking Alpha author The Value Corner rates the stock a Sell, saying that “despite being a market leader, current valuations ignore weakened profitability and a bearish macroeconomic environment.”
“While I do still like the firm in the long-term, better opportunities exist to extract alpha in a mostly undervalued market environment,” The Value Corner said in a November article, adding that shares “may be around 20% overvalued.”
On the other side of the spectrum, SA author The Beginner Investor predicted that AAPL “could offer a very decent near-term upside.” In November, the analyst said: “As an innovative company boasting a robust financial position, I believe Apple represents a valuable investment.”
“It becomes evident that Apple’s growth story remains compelling,” The Beginner Investor wrote. “While there may be fluctuations in short-term projections, the overarching narrative of Apple’s potential is one of enduring value.”
Latest earnings
In its last earnings report, Apple (AAPL) reported fiscal fourth-quarter results that topped expectations. This included revenue that slipped 3% from last year to $89.5B. The overall top-line decline came despite a 3% rise in iPhone revenue and an all-time record in services revenue.
Services revenue has been the main bright spot in recent earnings reports. For Q4, this segment showed 16% year-over-year growth, the largest rate since Q2 of 2022. Meanwhile, sales of Macs and iPads fell from the previous year, as did sales for wearables, home and accessories.
Earnings Predictions
Looking ahead, Apple predicted that its total revenue for the first quarter, which includes the holiday shopping season, will be about the same level as last year, even though last year’s quarter was longer.
Meanwhile, analysts expect the company to report normalized earnings of $2.09 per share for the current quarter on revenue of about $118B. In the same period last year, the company recorded a profit of $1.88 per share on revenue of $117.2B.
Source link
