Apple Inc (AAPL, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $174.72, Apple Inc has witnessed a daily loss of 1.04%, marked against a three-month change of -5.76%. A thorough analysis, underlined by the GF Score, suggests that Apple Inc is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 7/10
- Profitability rank: 10/10
- Growth rank: 9/10
- GF Value rank: 6/10
- Momentum rank: 7/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in financial strength, profitability, and growth, but a slightly lower GF Value rank, GuruFocus assigned Apple Inc the GF Score of 95 out of 100, which signals the highest outperformance potential.
Understanding Apple Inc's Business
Apple Inc, with a market cap of $2.69 trillion and sales of $385.71 billion, is among the largest companies in the world. It boasts a broad portfolio of hardware and software products targeted at consumers and businesses. The iPhone, which makes up a majority of the firm's sales, is complemented by other products like the Mac, iPad, and Watch, all designed around the iPhone as the focal point of an expansive software ecosystem. Apple has progressively worked to add new applications, like streaming video, subscription bundles, and augmented reality. The firm designs its own software and semiconductors while working with subcontractors like Foxconn and TSMC to build its products and chips. Slightly less than half of Apple's sales come directly through its flagship stores, with a majority of sales coming indirectly through partnerships and distribution.
Financial Strength Breakdown
According to the Financial Strength rating, Apple Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Apple Inc stands impressively at 40.5, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5. With an Altman Z-Score of 8.14, Apple Inc exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.28, Apple Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Apple Inc's impressive standing among its peers in generating profit. Apple Inc's Operating Margin has increased over the past five years, with recent figures showing a margin of 29.82% in 2023. Furthermore, Apple's Gross Margin has seen a consistent rise over the past five years, reaching 44.13% in 2023. This trend underscores the company's growing proficiency in transforming revenue into profit. The Piotroski F-Score confirms Apple Inc's solid financial situation, and its strong Predictability Rank of 5.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Apple Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 15.7%, which outperforms better than 79.97% of companies in the Hardware industry. Moreover, Apple Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 20.9, and the rate over the past five years is 16.9. This trend accentuates the company's continued capability to drive growth.
Conclusion: Apple Inc's Position for Outperformance
Considering Apple Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. With a GF Score of 95, Apple Inc stands out as a compelling investment opportunity for those seeking a company with a proven track record of financial resilience, profitability, and strategic growth. As the company continues to innovate and expand its product ecosystem, investors may find Apple Inc to be a cornerstone in their portfolios for years to come.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
