FIN 571 Week 2 rewriting

Stock Valuation and Analysis

Apple stock has been successful on Wall Street in the past. To look up the Apple Inc. stock you must look for their ticker symbol. According to Investing Answers (n.d.), “A ticker symbol -- also known as a stock symbol -- is a string of letters used to identify a stock, bond, mutual fund, ETF or other security traded on an exchange” (para. 1). For Apple Inc., the ticker symbol is AAPL which has four letters than the usual three or less and generally denote securities traded on the American Stock Exchange and Nasdaq. The current stock market is at 172.97 which is up from a month ago when it was only at 153.30. The high for the past fifty-two weeks is 233.47 and the low was 142.0. Another thing we must look at is the market capitalization or also known as the market cap. For the past five days, Apple Inc. had a closing stock price that has slowly risen every day.

Market Cap and Beta

According to The Motley Fool (n.d.), “Market capitalization is one of the best measures of a company's size. Also known as a market cap, market capitalization is the total market value of a company's outstanding shares of stock. For example, you may have heard Apple referred to as "the most valuable company in the world." That's because Apple currently has the highest market cap of any publicly traded company” (para 1). For Apple Inc., they have a market cap of 820.69B. As we can see in the chart below Apple Inc. has had a steady up rise since the middle of June of 2016 but towards the end of 2018, they had a sharp decline.

According to Investopedia (2019), “A beta coefficient is a measure of the volatility, or systematic risk, of an individual stock in comparison to the unsystematic risk of the entire market. Beta is used in the capital asset pricing model (CAPM), which calculates the expected return of an asset using beta and expected market returns. In statistical terms, beta represents the slope of the line through a regression of data points from an individual stock's returns against those of the market” (para. 1). Apple Inc. Beta (3Y monthly) is .99 which is just under the 1.0 which shows a price activity that is strongly correlated with the market.

Value of Stock, Price to Earnings Ratio & Dividend Yield

The stock price is the amount it cost to buy a share of a company or supply. There can be a lot of dynamics that can cause stock prices to change. When demand for a stock is high the value will rise. The price to earnings ratio is the price an investor is paying for one dollar of a company's earnings or profit. Apple Inc. has a P/E of 14.32 and is computed by dividing an Apple Inc. current stock price by its earnings per share. The Dividend yield is used to measure an investment’s productivity, and some investors view it as a form of "interest rate" that is earned on an investment. To calculate the dividend yield you must divide the annual dividend by the current stock price. Apple Inc. has a dividend yield of 1.7% or a dividend of $0.73 per share, or $2.92 annualized.

Enterprise Value, Stock Split & Book Value per Share

The enterprise value represents the entire economic value of a company. Market Capitalization + Total Debt - Cash = Enterprise Value and at Apple Inc. their enterprise value is 834.29B. Apple has split its stock four times since it went public and its last stock split was on June 9, 2014, at a 7-to-1 split. The book value per share is a company's assets minus its liabilities. Apple Inc. book value per share for the most recent quarter is 6.99.

Conclusion

Right now, investors are recommending is to hold stock in Apple Inc. and this has been steady. According to CNN Money, “The 32 analysts offering 12-month price forecasts for Apple Inc have a median target of 175.00, with a high estimate of 245.00 and a low estimate of 140.00. The median estimate represents a +0.44% increase from the last price of 174.23” (para. 1). The analyst's average revenue estimate for 2020 is between 10.62 to 14.49 per share with a consensus estimate of 12.90. One significant news items and press releases made by the company today was the announcement of Apple is to offer interest-free iPhone financing in China to try and get iPhone sales up. There is also a rumor out there that Apple may not have a 5G iPhone until 2020.

References Investing Answers. (n.d.). Ticker Symbol. Retrieved from https://investinganswers.com/financial-dictionary/stock-market/ticker-symbol-4969 The Motley Fool. (n.d.). What Is Market Capitalization?. Retrieved from https://www.fool.com/knowledge-center/market-capitalization.aspx Investopedia. (2019). Beta Definition. Retrieved from https://www.investopedia.com/terms/b/beta.asp CNN Money. (2019). Apple Inc (NASDAQ:AAPL). Retrieved from https://money.cnn.com/quote/forecast/forecast.html?symb=aapl