In this commentary, I will examine Apple Inc’s (NASDAQ:AAPL) latest earnings update (31 March 2018) and compare these figures against its performance over the past couple of years, as well as how the rest of the tech industry performed. As an investor, I find it beneficial to assess AAPL’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. See our latest analysis for Apple

Did AAPL beat its long-term earnings growth trend and its industry?

To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend allows me to analyze different companies on a more comparable basis, using the most relevant data points. For Apple, its most recent earnings (trailing twelve month) is US$53.32B, which compared to the prior year’s figure, has climbed up by 16.61%. Since these figures may be fairly nearsighted, I’ve calculated an annualized five-year figure for Apple’s net income, which stands at US$42.72B This suggests that, generally, Apple has been able to steadily grow its bottom line over the last couple of years as well.

NasdaqGS:AAPL Income Statement May 16th 18
NasdaqGS:AAPL Income Statement May 16th 18

What’s enabled this growth? Let’s see whether it is merely a result of an industry uplift, or if Apple has seen some company-specific growth. The ascend in earnings seems to be propelled by a strong top-line increase overtaking its growth rate of expenses. Though this has led to a margin contraction, it has made Apple more profitable. Looking at growth from a sector-level, the US tech industry has been growing, albeit, at a subdued single-digit rate of 5.88% over the previous twelve months, and 8.47% over the last five years. This means any uplift the industry is benefiting from, Apple is able to amplify this to its advantage.

What does this mean?

Though Apple’s past data is helpful, it is only one aspect of my investment thesis. While Apple has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Apple to get a better picture 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 31 March 2018. This may not be consistent with full year annual report figures.

Daniel Loeb has achieved 16.2% annualized returns over the last 20 years. What is he holding today?

Founder of the event-driven, value-oriented hedge fund Third Point, Daniel Loeb is one of the most successful activist investors on the market today. Explore his portfolio’s top holdings, see how he diversifies his investments, past performance and growth estimates. Click here to view a FREE detailed infographic analysis of Daniel Loeb’s investment portfolio.

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