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BusinessAnalysisReport12.docx

PART I

Apple Company

Executive Summary

Select a security and state the reason(s) for your selection.

The selected company is Apple Company that has been in existence for over twenty years, creating a strong market performance. The company has performed well on the NASDAQ (National Association of Securities Dealers Automated Quotation exchange) and has shown better financial projections attracting more investors. The company also enjoys high levels of brand loyalty and consequently being ranked severally as the globe's most valuable brand.

Brief Summary of the history of the company, its line(s) of business, and competitors.

Description

Apple Inc. as it is popularly known, was founded in 1977 and is headquartered in 1 Infinite Loop, Cupertino, California, United States. The company has over 123,000 employees. The company was founded by Steve Jobs, Ronald Wayne, and Steve Wozniak. The American multinational technology company deals with designing, developing and selling computer software, consumer electronics, and other online services. It had a revenue of over US$230 billion as of 2017 and a net income of US$48 billion. Its products include Mac, iPod, iPhone, iPad, Apple TV, electric vehicles and Apple Energy.

History

The Apple Inc. has had close to 42-years of existence with specific parts of history being between 1976 and 1984 when the company was founded and incorporated, 1984 to 1991 when it was successful with the Macintosh brand of electronics and the decline in sales and restructuring that occurred between 1991 and 1997. During the first phase of Apple Inc., the company built and sold Apple 1, and later in 1977, Apple II was introduced. The company went public in 1980 with a share costing $22, with its IPO (initial public offer) generating more capital than projected, a process that immediately created over 300millionares. From 1997 to 2007, the company returned back to profitability with the introduction of newer Microsoft Office software and other products.

Competitors

The Apple Inc. competitors include Dell Technologies which manufacturers mobile PCs and desk-based computers. Dell competes in the area of consumer PCs (personal computers). The other competitors include Lenovo, Samsung, Hewlett Packard, and Microsoft. Hewlett Packard Enterprise Company, producers of HP brand of PCs, presents a strong competition with a P/E ratio of 8.21 as compared to Apple's 17.75. Apple has a market capitalization of over 903 million as compared to HP's 36 million, while Dell Technologies has over 18 million in capitalization.

Present daily performance data for the period of 6/1/2017 to 6/1/2018.

The data is contained in the appendix for the stated period. On the first of June 2017, Apple Inc. had a high of 154.17, opening at 153.17 and closing at 152.76. The traded volumes were 24,451,200.

D. Use a fundamental approach in analyzing each company.

Overall Macroeconomic Outlook

The overall macroeconomic outlook of the US and global economies have been promising as the market has been receptive of the company products. From the Goldman Sachs analysis of the 2018 global economic outlook, the economy, as measured by the GDP (gross domestic product), was expected to grow by 4% (Goldman-Sachs, 2017). Most of the global labor markets are expected to grow strong as the low commodity and import prices unwind. The graph shows the estimated growth rates for the Americas, and the world at large for the global electronics, where Apple Company majorly operates. It represents the period from 2016 to over 2018 with expectations for over 2% growth from the previous years.

Figure 1: Global Economic Outlook

In 2018, the economic outlook is promising with the world expected to experience 4$ GDP growth, Europe at 2%, Americas (including the USA) at 5% Asian GDP and 3% for Australia, New Zealand, and South Africa. The figures put the market for electronics where the Apple Company conducive for more investments. The inflation rates for the US and for the entire world are

The unemployment rates expected for the year 2018 include

Industry Analysis

Using Bloomberg to obtain the company's SIC (Standard Industrial Classification) and NAICS (North American Industry Classification System) code. Use Bloomberg - type BI while in F8 i.e. the equities module, or use the Value Line Investment Survey database and Business Insights: Essentials (available at the Iona libraries website).

Company Analysis

· Ratio Analysis

Use Mergent Online to get five years worth of ratios for your time series (trend analysis) and then use the Key Business Ratios database available at our Library to search industry averages based on the company's SIC code for your cross-sectional analysis.

· Earnings Valuation Models

Dividend Valuation Models to determine "true" value

· Free Cash Flow

Use two out of the three approaches to estimate the intrinsic value of the sock you selected.

Estimate daily returns and risk of the security (beta and standard deviation).

The actual daily returns are calculated from the daily closing prices (data from yahoo finance you obtained in part C above). You can use the formula for actual rates of return from chapter 1.

Calculate the beta of the stock using Bloomberg (while in F8 type the name of the company then type beta. Use the adjusted beta you obtain from the regression analysis.

To calculate the standard deviation of the daily returns use excel. While in excel select Formulas-More Functions-Statistical- STDVA and then highlight the column with the stock's daily returns.

Compare the security's actual return with that of the market (S&P 500) for the stated period of time.

Use Bloomberg to get the returns of the S&P500 index for the period of 6/1/2017 to 6/1/2018

Conclusion

Appendix 1. Historical Data on Daily performance

Date

Open

High

Low

Close

Adj Close

Volume

5/31/2017

153.97

154.17

152.38

152.76

150.4217

24451200

6/1/2017

153.17

153.33

152.22

153.18

150.8353

16404100

6/2/2017

153.58

155.45

152.89

155.45

153.0705

27770700

6/5/2017

154.34

154.45

153.46

153.93

151.5738

25331700

6/6/2017

153.9

155.81

153.78

154.45

152.0858

26624900

6/7/2017

155.02

155.98

154.48

155.37

152.9918

21069600

6/8/2017

155.25

155.54

154.4

154.99

152.6176

21250800

6/9/2017

155.19

155.19

146.02

148.98

146.6996

64882700

6/12/2017

145.74

146.09

142.51

145.42

143.1941

72307300

6/13/2017

147.16

147.45

145.15

146.59

144.3462

34165400

6/14/2017

147.5

147.5

143.84

145.16

142.9381

31531200

6/15/2017

143.32

144.48

142.21

144.29

142.0814

32165400

6/16/2017

143.78

144.5

142.2

142.27

140.0923

50361100

6/19/2017

143.66

146.74

143.66

146.34

144.1

32541400

6/20/2017

146.87

146.87

144.94

145.01

142.7904

24900100

6/21/2017

145.52

146.07

144.61

145.87

143.6372

21265800

6/22/2017

145.77

146.7

145.12

145.63

143.4009

19106300

6/23/2017

145.13

147.16

145.11

146.28

144.0409

35439400

6/26/2017

147.17

148.28

145.38

145.82

143.588

25692400

6/27/2017

145.01

146.16

143.62

143.73

141.5299

24761900

6/28/2017

144.49

146.11

143.16

145.83

143.5978

22082400

6/29/2017

144.71

145.13

142.28

143.68

141.4807

31499400

6/30/2017

144.45

144.96

143.78

144.02

141.8155

23024100

7/3/2017

144.88

145.3

143.1

143.5

141.3035

14258300

7/5/2017

143.69

144.79

142.72

144.09

141.8844

21569600

7/6/2017

143.02

143.5

142.41

142.73

140.5453

24128800

7/7/2017

142.9

144.75

142.9

144.18

141.9731

19201700

7/10/2017

144.11

145.95

143.37

145.06

142.8396

21090600

7/11/2017

144.73

145.85

144.38

145.53

143.3024

19781800

7/12/2017

145.87

146.18

144.82

145.74

143.5092

24884500

7/13/2017

145.5

148.49

145.44

147.77

145.5081

25199400

7/14/2017

147.97

149.33

147.33

149.04

146.7586

20132100

7/17/2017

148.82

150.9

148.57

149.56

147.2707

23793500

7/18/2017

149.2

150.13

148.67

150.08

147.7828

17868800

7/19/2017

150.48

151.42

149.95

151.02

148.7084

20923000

7/20/2017

151.5

151.74

150.19

150.34

148.0388

17243700

7/21/2017

149.99

150.44

148.88

150.27

147.9698

26252600

7/24/2017

150.58

152.44

149.9

152.09

149.762

21493200

7/25/2017

151.8

153.84

151.8

152.74

150.402

18853900

7/26/2017

153.35

153.93

153.06

153.46

151.111

15781000

7/27/2017

153.75

153.99

147.3

150.56

148.2554

32476300

7/28/2017

149.89

150.23

149.19

149.5

147.2116

17213700

7/31/2017

149.9

150.33

148.13

148.73

146.4534

19845900

8/1/2017

149.1

150.22

148.41

150.05

147.7532

35368600

8/2/2017

159.28

159.75

156.16

157.14

154.7347

69936800

8/3/2017

157.05

157.21

155.02

155.57

153.1887

27097300

8/4/2017

156.07

157.4

155.69

156.39

153.9961

20559900

8/7/2017

157.06

158.92

156.67

158.81

156.3791

21870300

8/8/2017

158.6

161.83

158.27

160.08

157.6297

36205900

8/9/2017

159.26

161.27

159.11

161.06

158.5947

26131500

8/10/2017

159.9

160

154.63

155.32

153.5432

40804300

8/11/2017

156.6

158.57

156.07

157.48

155.6784

26257100

8/14/2017

159.32

160.21

158.75

159.85

158.0213

22122700

8/15/2017

160.66

162.2

160.14

161.6

159.7513

29465500

8/16/2017

161.94

162.51

160.15

160.95

159.1087

27671600

8/17/2017

160.52

160.71

157.84

157.86

156.0541

27940600

8/18/2017

157.86

159.5

156.72

157.5

155.6982

27428100

8/21/2017

157.5

157.89

155.11

157.21

155.4115

26368500

8/22/2017

158.23

160

158.02

159.78

157.9521

21604600

8/23/2017

159.07

160.47

158.88

159.98

158.1498

19399100

8/24/2017

160.43

160.74

158.55

159.27

157.448

19818900

8/25/2017

159.65

160.56

159.27

159.86

158.0312

25480100

8/28/2017

160.14

162

159.93

161.47

159.6228

25966000

8/29/2017

160.1

163.12

160

162.91

161.0463

29516900

8/30/2017

163.8

163.89

162.61

163.35

161.4813

27269600

8/31/2017

163.64

164.52

163.48

164

162.1238

26785100

9/1/2017

164.8

164.94

163.63

164.05

162.1733

16591100

9/5/2017

163.75

164.25

160.56

162.08

160.2258

29468500

9/6/2017

162.71

162.99

160.52

161.91

160.0578

21651700

9/7/2017

162.09

162.24

160.36

161.26

159.4152

21928500

9/8/2017

160.86

161.15

158.53

158.63

156.8153

28611500

9/11/2017

160.5

162.05

159.89

161.5

159.6525

31085900

9/12/2017

162.61

163.96

158.77

160.86

159.0198

71714000

9/13/2017

159.87

159.96

157.91

159.65

157.8236

44907400

9/14/2017

158.99

159.4

158.09

158.28

156.4693

23760700

9/15/2017

158.47

160.97

158

159.88

158.051

49114600

9/18/2017

160.11

160.5

158

158.67

156.8548

28269400

9/19/2017

159.51

159.77

158.44

158.73

156.9141

20810600

9/20/2017

157.9

158.26

153.83

156.07

154.2846

52951400

9/21/2017

155.8

155.8

152.75

153.39

151.6352

37511700

9/22/2017

151.54

152.27

150.56

151.89

150.1524

46645400

9/25/2017

149.99

151.83

149.16

150.55

148.8277

44387300

9/26/2017

151.78

153.92

151.69

153.14

151.3881

36660000

9/27/2017

153.8

154.72

153.54

154.23

152.4656

25504200

9/28/2017

153.89

154.28

152.7

153.28

151.5265

22005500

9/29/2017

153.21

154.13

152

154.12

152.3569

26299800

10/2/2017

154.26

154.45

152.72

153.81

152.0504

18698800

10/3/2017

154.01

155.09

153.91

154.48

152.7127

16230300

10/4/2017

153.63

153.86

152.46

153.48

151.7242

20163800

10/5/2017

154.18

155.44

154.05

155.39

153.6123

21283800

10/6/2017

154.97

155.49

154.56

155.3

153.5234

17407600

10/9/2017

155.81

156.73

155.49

155.84

154.0572

16262900

10/10/2017

156.06

158

155.1

155.9

154.1165

15617000

10/11/2017

155.97

156.98

155.75

156.55

154.7591

16905600

10/12/2017

156.35

157.37

155.73

156

154.2154

16125100

10/13/2017

156.73

157.28

156.41

156.99

155.194

16394200

10/16/2017

157.9

160

157.65

159.88

158.051

24121500

10/17/2017

159.78

160.87

159.23

160.47

158.6342

18997300

10/18/2017

160.42

160.71

159.6

159.76

157.9323

16374200

10/19/2017

156.75

157.08

155.02

155.98

154.1956

42584200

10/20/2017

156.61

157.75

155.96

156.25

154.4625

23974100

10/23/2017

156.89

157.69

155.5

156.17

154.3834

21984300

10/24/2017

156.29

157.42

156.2

157.1

155.3028

17757200

10/25/2017

156.91

157.55

155.27

156.41

154.6207

21207100

10/26/2017

157.23

157.83

156.78

157.41

155.6092

17000500

10/27/2017

159.29

163.6

158.7

163.05

161.1847

44454200

10/30/2017

163.89

168.07

163.72

166.72

164.8127

44700800

10/31/2017

167.9

169.65

166.94

169.04

167.1062

36046800

11/1/2017

169.87

169.94

165.61

166.89

164.9808

33637800

11/2/2017

166.6

168.5

165.28

168.11

166.1868

41393400

11/3/2017

174

174.26

171.12

172.5

170.5266

59398600

11/6/2017

172.37

174.99

171.72

174.25

172.2566

35026300

11/7/2017

173.91

175.25

173.6

174.81

172.8102

24361500

11/8/2017

174.66

176.24

174.33

176.24

174.2238

24409500

11/9/2017

175.11

176.1

173.14

175.88

173.868

29482600

11/10/2017

175.11

175.38

174.27

174.67

173.2925

25145500

11/13/2017

173.5

174.5

173.4

173.97

172.598

16982100

11/14/2017

173.04

173.48

171.18

171.34

169.9888

24782500

11/15/2017

169.97

170.32

168.38

169.08

167.7466

29158100

11/16/2017

171.18

171.87

170.3

171.1

169.7507

23637500

11/17/2017

171.04

171.39

169.64

170.15

168.8082

21899500

11/20/2017

170.29

170.56

169.56

169.98

168.6395

16262400

11/21/2017

170.78

173.7

170.78

173.14

171.7746

25131300

11/22/2017

173.36

175

173.05

174.96

173.5802

25588900

11/24/2017

175.1

175.5

174.65

174.97

173.5901

14026700

11/27/2017

175.05

175.08

173.34

174.09

172.7171

20716800

11/28/2017

174.3

174.87

171.86

173.07

171.7051

26428800

11/29/2017

172.63

172.92

167.16

169.48

168.1434

41666400

11/30/2017

170.43

172.14

168.44

171.85

170.4948

41527200

12/1/2017

169.95

171.67

168.5

171.05

169.7011

39759300

12/4/2017

172.48

172.62

169.63

169.8

168.4609

32542400

12/5/2017

169.06

171.52

168.4

169.64

168.3022

27350200

12/6/2017

167.5

170.2

166.46

169.01

167.6771

28560000

12/7/2017

169.03

170.44

168.91

169.32

167.9847

25673300

12/8/2017

170.49

171

168.82

169.37

168.0343

23355200

12/11/2017

169.2

172.89

168.79

172.67

171.3083

35273800

12/12/2017

172.15

172.39

171.46

171.7

170.3459

19409200

12/13/2017

172.5

173.54

172

172.27

170.9114

23818400

12/14/2017

172.4

173.13

171.65

172.22

170.8618

20476500

12/15/2017

173.63

174.17

172.46

173.97

172.598

40169300

12/18/2017

174.88

177.2

174.86

176.42

175.0287

29421100

12/19/2017

175.03

175.39

174.09

174.54

173.1635

27436400

12/20/2017

174.87

175.42

173.25

174.35

172.975

23475600

12/21/2017

174.17

176.02

174.1

175.01

173.6298

20949900

12/22/2017

174.68

175.42

174.5

175.01

173.6298

16349400

12/26/2017

170.8

171.47

169.68

170.57

169.2248

33185500

12/27/2017

170.1

170.78

169.71

170.6

169.2546

21498200

12/28/2017

171

171.85

170.48

171.08

169.7308

16480200

12/29/2017

170.52

170.59

169.22

169.23

167.8954

25999900

1/2/2018

170.16

172.3

169.26

172.26

170.9015

25555900

1/3/2018

172.53

174.55

171.96

172.23

170.8717

29517900

1/4/2018

172.54

173.47

172.08

173.03

171.6654

22434600

1/5/2018

173.44

175.37

173.05

175

173.6199

23660000

1/8/2018

174.35

175.61

173.93

174.35

172.975

20567800

1/9/2018

174.55

175.06

173.41

174.33

172.9552

21584000

1/10/2018

173.16

174.3

173

174.29

172.9155

23959900

1/11/2018

174.59

175.49

174.49

175.28

173.8977

18667700

1/12/2018

176.18

177.36

175.65

177.09

175.6934

25418100

1/16/2018

177.9

179.39

176.14

176.19

174.8005

29565900

1/17/2018

176.15

179.25

175.07

179.1

177.6876

33888500

1/18/2018

179.37

180.1

178.25

179.26

177.8463

31193400

1/19/2018

178.61

179.58

177.41

178.46

177.0526

32425100

1/22/2018

177.3

177.78

176.6

177

175.6041

27108600

1/23/2018

177.3

179.44

176.82

177.04

175.6438

32689100

1/24/2018

177.25

177.3

173.2

174.22

172.8461

51105100

1/25/2018

174.51

174.95

170.53

171.11

169.7606

41529000

1/26/2018

172

172

170.06

171.51

170.1574

39143000

1/29/2018

170.16

170.16

167.07

167.96

166.6354

50640400

1/30/2018

165.53

167.37

164.7

166.97

165.6532

46048200

1/31/2018

166.87

168.44

166.5

167.43

166.1096

32478900

2/1/2018

167.17

168.62

166.76

167.78

166.4568

47230800

2/2/2018

166

166.8

160.1

160.5

159.2343

86593800

2/5/2018

159.1

163.88

156

156.49

155.2559

72738500

2/6/2018

154.83

163.72

154

163.03

161.7443

68243800

2/7/2018

163.09

163.4

159.07

159.54

158.2818

51608600

2/8/2018

160.29

161

155.03

155.15

153.9264

54390500

2/9/2018

157.07

157.89

150.24

156.41

155.8092

70672600

2/12/2018

158.5

163.89

157.51

162.71

162.085

60819500

2/13/2018

161.95

164.75

161.65

164.34

163.7087

32549200

2/14/2018

163.04

167.54

162.88

167.37

166.7271

40644900

2/15/2018

169.79

173.09

169

172.99

172.3255

51147200

2/16/2018

172.36

174.82

171.77

172.43

171.7676

40176100

2/20/2018

172.05

174.26

171.42

171.85

171.1899

33930500

2/21/2018

172.83

174.12

171.01

171.07

170.4129

37471600

2/22/2018

171.8

173.95

171.71

172.5

171.8374

30991900

2/23/2018

173.67

175.65

173.54

175.5

174.8259

33812400

2/26/2018

176.35

179.39

176.21

178.97

178.2825

38162200

2/27/2018

179.1

180.48

178.16

178.39

177.7048

38928100

2/28/2018

179.26

180.62

178.05

178.12

177.4358

37782100

3/1/2018

178.54

179.78

172.66

175

174.3278

48802000

3/2/2018

172.8

176.3

172.45

176.21

175.5331

38454000

3/5/2018

175.21

177.74

174.52

176.82

176.1408

28401400

3/6/2018

177.91

178.25

176.13

176.67

175.9914

23788500

3/7/2018

174.94

175.85

174.27

175.03

174.3577

31703500

3/8/2018

175.48

177.12

175.07

176.94

176.2603

23774100

3/9/2018

177.96

180

177.39

179.98

179.2886

32185200

3/12/2018

180.29

182.39

180.21

181.72

181.022

32207100

3/13/2018

182.59

183.5

179.24

179.97

179.2787

31693500

3/14/2018

180.32

180.52

177.81

178.44

177.7546

29368400

3/15/2018

178.5

180.24

178.07

178.65

177.9637

22743800

3/16/2018

178.65

179.12

177.62

178.02

177.3362

39404700

3/19/2018

177.32

177.47

173.66

175.3

174.6266

33446800

3/20/2018

175.24

176.8

174.94

175.24

174.5669

19649400

3/21/2018

175.04

175.09

171.26

171.27

170.6121

37054900

3/22/2018

170

172.68

168.6

168.85

168.2014

41490800

3/23/2018

168.39

169.92

164.94

164.94

164.3064

41028800

3/26/2018

168.07

173.1

166.44

172.77

172.1064

37541200

3/27/2018

173.68

175.15

166.92

168.34

167.6934

40922600

3/28/2018

167.25

170.02

165.19

166.48

165.8405

41668500

3/29/2018

167.81

171.75

166.9

167.78

167.1355

38398500

4/2/2018

166.64

168.94

164.47

166.68

166.0397

37586800

4/3/2018

167.64

168.75

164.88

168.39

167.7432

30278000

4/4/2018

164.88

172.01

164.77

171.61

170.9508

34605500

4/5/2018

172.58

174.23

172.08

172.8

172.1362

26933200

4/6/2018

170.97

172.48

168.2

168.38

167.7332

35005300

4/9/2018

169.88

173.09

169.85

170.05

169.3968

29017700

4/10/2018

173

174

171.53

173.25

172.5845

28408600

4/11/2018

172.23

173.92

171.7

172.44

171.7776

22431600

4/12/2018

173.41

175

173.04

174.14

173.4711

22889300

4/13/2018

174.78

175.84

173.85

174.73

174.0588

25124300

4/16/2018

175.03

176.19

174.83

175.82

175.1446

21578400

4/17/2018

176.49

178.94

176.41

178.24

177.5553

26605400

4/18/2018

177.81

178.82

176.88

177.84

177.1569

20754500

4/19/2018

173.76

175.39

172.66

172.8

172.1362

34808800

4/20/2018

170.6

171.22

165.43

165.72

165.0834

65491100

4/23/2018

166.83

166.92

164.09

165.24

164.6053

36515500

4/24/2018

165.67

166.33

161.22

162.94

162.3141

33692000

4/25/2018

162.62

165.42

162.41

163.65

163.0214

28382100

4/26/2018

164.12

165.73

163.37

164.22

163.5892

27963000

4/27/2018

164

164.33

160.63

162.32

161.6965

35655800

4/30/2018

162.13

167.26

161.84

165.26

164.6252

42427400

5/1/2018

166.41

169.2

165.27

169.1

168.4504

53569400

5/2/2018

175.23

177.75

173.8

176.57

175.8918

66539400

5/3/2018

175.88

177.5

174.44

176.89

176.2105

34068200

5/4/2018

178.25

184.25

178.17

183.83

183.1239

56201300

5/7/2018

185.18

187.67

184.75

185.16

184.4487

42451400

5/8/2018

184.99

186.22

183.67

186.05

185.3353

28402800

5/9/2018

186.55

187.4

185.22

187.36

186.6403

23211200

5/10/2018

187.74

190.37

187.65

190.04

189.31

27989300

5/11/2018

189.49

190.06

187.45

188.59

188.59

26212200

5/14/2018

189.01

189.53

187.86

188.15

188.15

20778800

5/15/2018

186.78

187.07

185.1

186.44

186.44

23695200

5/16/2018

186.07

188.46

186

188.18

188.18

19183100

5/17/2018

188

188.91

186.36

186.99

186.99

17294000

5/18/2018

187.19

187.81

186.13

186.31

186.31

18297700

5/21/2018

188

189.27

186.91

187.63

187.63

18400800

5/22/2018

188.38

188.88

186.78

187.16

187.16

15240700

5/23/2018

186.35

188.5

185.76

188.36

188.36

19467900

5/24/2018

188.77

188.84

186.21

188.15

188.15

20401000

5/25/2018

188.23

189.65

187.65

188.58

188.58

17461000

5/29/2018

187.6

188.75

186.87

187.9

187.9

22369000

5/30/2018

187.72

188

186.78

187.5

187.5

18690500

5/31/2018

187.22

188.23

186.14

186.87

186.87

27482800