When Apple Inc’s (NASDAQ:AAPL) announced its latest earnings (30 December 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Apple’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not AAPL actually performed well. Below is a quick commentary on how I see AAPL has performed. View our latest analysis for Apple
Could AAPL beat the long-term trend and outperform its industry?
For the purpose of this commentary, I like to use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This blend enables me to analyze various companies in a uniform manner using the latest information. For Apple, its latest trailing-twelve-month earnings is US$50.53B, which, relative to the previous year’s figure, has moved up by 11.73%. Given that these figures may be relatively short-term, I have determined an annualized five-year figure for AAPL’s earnings, which stands at US$41.51B This shows that, generally, Apple has been able to steadily grow its profits over the past couple of years as well.
How has it been able to do this? Let’s take a look at whether it is merely owing to industry tailwinds, or if Apple has experienced some company-specific growth. The climb in earnings seems to be propelled by a robust top-line increase beating its growth rate of expenses. Though this brought about a margin contraction, it has made Apple more profitable. Scanning growth from a sector-level, the US tech industry has been growing, albeit, at a subdued single-digit rate of 6.61% over the past twelve months, and 9.07% over the past half a decade. This suggests that any tailwind the industry is profiting from, Apple is capable of amplifying this to its advantage.
What does this mean?
Though Apple’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Apple gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Apple to get a more holistic view of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for AAPL’s future growth? Take a look at our free research report of analyst consensus for AAPL’s outlook.
- 2. Financial Health: Is AAPL’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 December 2017. This may not be consistent with full year annual report figures.
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