Wk 4 Summative Assessment: Financial Market Shareholder Analysis
gbensmilling
FIN571Week2.pptxWk 2:-Business valuation presentation
Gbenga adeogun
University of phoenix
Carol sommers
Fin/571
March 21st, 2023
Introduction
The reason behind this presentation is to assess the cash flow, valuation and KPI’s for financial sustainability of Apple Inc.
Apple Inc. is an American multinational corporation that is listed on NASDAQ..
The company operates with a sticker symbol of AAPL
The presentation will focus on among others, KPI such as stock price, price earning ratio and market capitalization
Two Key Performance Indicators of Apple
Revenue Growth: Revenue is a key performance indicator for Apple Inc. that measures the total amount of money their business has generated from the sale of products and services.
Earnings Per Share : It is a key performance indicator for Apple Inc. as it helps investors to evaluate the profitability of the company.
Revenue and EPS (Earnings Per Share) are two of the most important performance indicators of Apple Inc. Revenue is the total amount of money a company earns from its activities and is a key indicator of the company's success. EPS represents the amount of money that each share earns from the company's activities and is an important indicator of the company's ability to generate returns for its shareholders. As such, these two metrics provide investors with a good overview of the company's financial performance. For instance, Apple reported increased revenue in the financial year 2022 from $ 365.8billion in 2021 to $ 387.54billion . On the other hand the EPS of the company increased from $ 5.67 in 2021 to $ 6.15 in 2022.
3
Stock price and price earning ratio
Stock price
FY 2022- $ 129.73
FY2021-$ 176.28
FY2020-$ 130.92
Price earning ratio
FY 2022-$ 22.03
FY2021- $ 29.18
FY2020-$ 35.45
The stock price and the price earning ratios of Apple presented above relates 31st Dec. Stock price is the cost of a single share of a company's stock. Price earnings ratio (P/E) is a measure of the stock's current market price relative to its per-share earnings. The stock price and price earning ratio of Apple fluctuated over the period due to the changes in the market conditions and investors expectations. For instance, the stock price decreased considerably in 2022 from $ 176.28 in 2021 to $ 129.73(Macrotrend 2023). on the other hand the price earning ratio decreased from $ 29.18 to $ 22.03. A decrease in the stock price can lead to a decrease in the company's market capitalization, which in turn can lead to decreased investor confidence in the company. This can lead to a decrease in investment in the company and limit its access to capital. Additionally, a decrease in the price-earnings ratio can make the company less attractive to potential investors, since it reflects the company's ability to generate profits. This can lead to a lack of capital investment and a decrease in the company's growth rate. All of these factors can have a negative impact on the company's performance.
4
Apple Inc. market capitalization
Market capitalization, is a measurement of the value of a publicly traded company's outstanding shares
Apple Market Capitalization was calculated by multiplying the overall number of the company’s shares by the current market price of one share.
Market capitalization is one of the most important ways of ranking the relative size of a company.
The market cap of Apple Inc. as of March 15th 2023 is 2.42trillion based on the stock price of $ 152.88 (Macrotrend 2023):
Market capitalization is an important indicator to investors because it helps them gauge the risk and potential return associated with a particular stock. Companies with larger market capitalizations are typically more stable and have a larger pool of potential investors, meaning they are generally less volatile. For Apple Inc, its market cap is currently around $ 2.42 trillion making it the most valuable public company in the world(Macrotrend (2023). This is a testament to the success of the company and its products, and is an indication of the strong growth potential that investors see in the company. The market cap of Apple Inc is an important indicator for investors, as it gives them an idea of how much the company is worth and how its stock is performing relative to its competitors. It is also an indication of the strong growth potential that investors see in the company, and can provide an insight into the future performance of the company stock.
5
Trends in Apple Inc. Stock price
FY 2022- $ 129.73
FY2021-$ 176.28
FY2020-$ 130.92
The stock price of Apple Inc. is highly dependent on the market conditions and investors expectation. In 2020 the stock price of Apple was low because of the impacts of the Covid 19 on the global economy. However, as the case of the pandemic decreased resulting expansion in the global business the stock price of Apple increased to $ 176.28. But at the end of the 2022 the stock price had declined considerably to $ 129.73. This was as a result of Apple's sales of its flagship products, such as the iPhone, had started to slow down due to increasing market saturation. As more and more people had access to iPhones and other Apple products, the demand for new devices decreased, affecting the investors expectations.
6
Trends in Apple inc. dividend payout
The dividend payout of Apple was $ 0.91 in the fiscal year 2022
In 2021 the company had a dividend payout of 0.83
Apple Inc. dividend payout in 2020 was $ 0.78
Apple's dividend payout has experienced an upward trend over the past few years. The company has consistently grown its dividend payout year-over-year, with the most recent dividend payout being $ 0.91 up from $ 0.83 in 2021(Yahoo Finance 2023). This growth reflects Apple's focus on creating long-term value for its shareholders. The current market conditions have influenced Apple's dividend payout trend. More specifically is Apple's strong financial performance which has enabled it to increase its dividend payout. With strong financials, the company has been able to support its dividend payments and increase them over time.
7
Trend in Apple Inc stockholders’ equity
FY 2022- $ 50.67billion
FY 2021-$ 63.09billion
FY 2020- 65.33billion
Apple’s shareholders equity has been declining since fiscal year 2020. The owners equity was $ 65.33 billion in 2020 but has since decline to $ 50.67 at the end of 2022(Yahoo Finance 2023):.The decline in Apple's shareholders equity since 2021 can be attributed to a number of factors. Firstly, Apple's share price has decreased due to the impact of the COVID-19 pandemic on the global economy. This has caused a decrease in investor confidence in the company, leading to a decline in its share price. Besides Apple has been facing increasing competition from other companies in the technology sector, leading to a decrease in its market share. This has further contributed to the decline in its share price.
8
Recommendation
The current and the expected performance of Apple Inc makes many market analyst to recommend a buy for the company’s stock.
The increasing profitability and revenue growth are the two important factors that are driving this recommendation.
Based on the financial analysis and valuation of Apple I recommend a buy of its stock
Stock market analysts are currently recommending buying Apple's stock due to its strong growth potential. Apple is one of the most valuable companies in the world and is a leader in the technology and consumer electronics industries. The company has also outperformed its competitors in terms of both revenue and earnings growth, which has made it one of the most lucrative company in the world( Bai,2022). Apple's market share has also been rising, as their products have become increasingly popular. More importantly Apple inc. has also been investing in new sectors such as healthcare, entertainment, and augmented reality, which could lead to further growth in the future.
9
References
Bai, M. (2022). Macro Analysis on Apple Stock In order to determine investment value of Apple. In SHS Web of Conferences (Vol. 151, p. 01032). EDP Sciences.
Macrotrend (2023):Apple stock price 2010-2022: AAPL: Retrievd March 15 from
https://www.macrotrends.net/stocks/charts/AAPL/apple/income-statement
Macrotrend (2023): Apple financial statements 2010-2022. Retrieved March 15 from
https://www.macrotrends.net/stocks/charts/AAPL/apple/financial-statements
Yahoo Finance 2023: Apple financial statements and dividend history : Retrieved March 15
from https://finance.yahoo.com/quote/AAPL/analysis/
