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Category: Apple (APPL) and Nasdaq
Date: 5 August 2020 This article takes a look at the following question. Is this a good time to buy the stock of Apple (APPL)? The short simple answer to this question is absolutely.. NOT. Its overvalued and if you buying into the stock now you run the risk of significant losses should the stock price correction takes place to bring it back to more realistic valuations.
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Since the stock of Apple is trading at well above our target price (full value price) and our suggested entry price we will go against almost all market commentators and punters and rate Apple as a sell"
More About Apple (APPL)
Apple is one of the worlds biggest smart phone and related accessories makers with the group manufacturing the iPhone, iPad, Macbook (laptops for those that don't know), Apple Watch and other related products and services. The group is starting to focus more and more on their services offering such as cloud services for their device users and services such as iTunes.
Overview of Apple's latest earnings report
Overview of Apple's latest earnings report
Apple sales by product type and category for the 3rd quarter of 2020:
Our latest stock valuation of Apple (APPL): $247.90. More on this at the bottom of this article
- Sales of Products $46.529 billion (down from $42.354 billion for the same quarter of the previous year)
- Sales of Products increased by 9.8% over the last 12 months
- Sales of Services $13.156 billion (up from $11.455 billion for the same quarter of the previous year)
- Sales of Services increased by 14.8% over the last 12 months
- Total cost of sales: $37.005 billion (up from $33.582 billion for the same quarter of the previous year)
- Total cost of sales increased by 10.2% over the last 12 months
- Margins remained pretty constant as sales and cost of sales grew at very similar rates
- Operating income: $13.091 (up from $11.544 billion for the same quarter of the previous year)
- Net income $11.253 billion (up from $10.044 billion for the same quarter of the previous year)
- Diluted earnings per share: $2.58 (up from $2.18 for the same quarter of the previous year)
- PE ratio of Apple: 28.2
- Dividend declared: $0.82
- Dividend yield: 0.9%
- Number of shares in issue: 4.354 billion (down from 4.601 billion for the same period of the previous year)
- Cash and cash equivalents: $33.383 billion
- Cash and cash equivalents per share: $7.67
- Cash and cash equivalents makes up 1.9% of Apple's market capital
- Cash and cash equivalents makes up 10.5% of Apple's total assets
- Cash and cash equivalents per share: $7.67
- Accounts receivable, net: $17.883 billion
- Accounts receivable makes up 5.6% of Apple's total assets
- Inventories: $3.978 billion
- Inventories makes up 1.25% of Apple's total assets
- Total stockholders equity in Apple: $72.282 billion
- Stockholders equity per share in Apple: $16.60
- Apple is trading at 23.2 times its stockholders equity per share which is well outside the expected range of between 2 and 4 times that most firms tend to trade at. This ratio should raise alarm bells for investors and does point to how inflated APPL's stock price is.
- Cash generated from operations (for the 3 quarters of fiscal 2020): $60.098 billion
- Cash generated from operations per share (for the 3 quarters of fiscal 2020): $13.80
Apple sales by product type and category for the 3rd quarter of 2020:
- iPhone $26.418 billon (up 1.6% from $25.986 billion for the same quarter of the previous year)
- Mac: $7.079 billion (up 21.6% from $5.820 billion for the same quarter of the previous year)
- iPad: $6.582 billion (up 31% from $5.023 billion for the same quarter of the previous year)
- Wearables, Home and Accessories: $6.450 billion (up 16.7% from $5.525 billion for the same quarter of the previous year)
- Services: $13.156 billion (up 14.8% from $11.455 billion for the same quarter of the previous year)
Our latest stock valuation of Apple (APPL): $247.90. More on this at the bottom of this article
Stock price history of Apple (APPL) over the last 5 years
The image below shows the stock price history of Apple over the last 5 years. And its been a very good time for Apple (APPL) stockholders. Over the last 5 years the stock price
Our latest stock valuation of Apple (APPL)
So what do we value Apple's stock at after the release of their 3rd quarter 2020 earnings report? Following Apple's 3rd quarter 2020 earnings report our valuation model provides a target price (full value price) for Apple at $247.90 a stock (up slightly from our 2nd quarter 2019 earnings report valuation of Apple). We therefore believe that the stock of Apple is overvalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $247.90. Therefore we believe a good entry point into Apple stock is at $223.10 or below. We expect the stock of Apple to pull back from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is significantly overvalued at this point in time.
Since the stock of Apple is trading at well above our target price (full value price) and our suggested entry price we will go against almost all market commentators and punters and rate Apple as a sell
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $247.90. Therefore we believe a good entry point into Apple stock is at $223.10 or below. We expect the stock of Apple to pull back from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is significantly overvalued at this point in time.
Since the stock of Apple is trading at well above our target price (full value price) and our suggested entry price we will go against almost all market commentators and punters and rate Apple as a sell