Apple Financial Performance and Key Performance Indicators

Apple Financial Performance and Key Performance Indicators

Apple is a multinational company specializing in information technology equipment such as computers, cell phones, wearable devices, and tablets. The company has maintained a top position in the Fortune 500 list due to its outstanding performance and high profitability. The company has also held a competitive advantage in the information technology sector, securing a significant market share and contributing to its high sales and profit margin. Apple’s ticker symbol is AAPL, and it is recognized globally. This research reviews the company’s financial performance and key performance indicators.

Key performance indicators and financial information

Apple’s financial performance is reviewed through its cash flows. Since 2019, the cash generated from operating activities has significantly increased. The company has also increased financing activities to sustain operations and remain competitive. In 2021, the cash flow from operations was $104.038 billion. Table 1 below summarizes Apple’s cash flow from operations in 2021.

The company’s price-to-earnings ratio was also significantly high, reaching approximately 23.1x. The company recorded the highest price-to-earnings ratio in 2020, when it hit an average of 33.9x. The company has also invested in dividends to attract investors. In 2021, the dividend yield amounted to 0.55%. The company also paid a $0.22 per share dividend during 2022’s first quarter, recording a 7% increase from the first quarter. Apple’s shares are significant in maintaining investors even after paying dividends. In the first quarter of 2021, the earnings per share were $2.1, significantly higher than in other years when it stagnated at an average of $0.34.

Apple has maintained an increase in revenue over the years due to its innovative culture that enables it to produce high-quality products sold at a high price. By the end of 2021, the company had generated a revenue of $365.817 billion. The payment is expected to increase in the next 12 months (Mullaney, 2022). The forecast is attributed to the revenue increase over the past five years, as shown below.

The company’s trade volume also enhances Apple’s revenue growth. In 2021, the trading volume amounted to 78.751 million. Trade is influenced by the stock price, which is currently $174.31 and is anticipated to rise with the rice in stock value. Therefore, investors advise individuals interested in investing in the company to buy the stock now because the store’s value will soon increase after Apple launches a new product in March (Seitz, 2022). According to Navellier (2022), the company plans to launch the iPhone SE 3 and new Mac computers. The iPhone will have enhanced features, including 5G connectivity, thus enabling the company to set a high price. The products will also increase the company’s market cap, thus increasing profit margins. By April 2022, Apple’s market cap was $2.894 trillion, making the company the most valued business enterprise worldwide.

Relationship between the stock price and price-to-earnings ratio

Apple has a high stock price, translating to a high price-to-earnings ratio. The rise in the price is attributed to the increase in investors willing to pay for the company’s earnings per share due to the significant business growth witnessed over the years and the less business risk. The company is also unique in the telecommunications industry because it does not focus on regular products that can be acquired easily but targets the wealthy elite who can afford the high prices set based on the features and quality of Apple products. The company has also consistently produced high-quality products, creating customer loyalty and guaranteeing that new products will still be purchased. Apple has also assured investors of continuous growth as it continues to invent new products that upgrade existing ones. Therefore, investors are confident that the company’s profitability will remain high, thus enabling them to generate profit by trading Apple’s stocks.

Apple’s market capitalization and what it means for investors

Apple is among the companies with the highest market cap across the world. The high market cap arises from the company’s culture of continuous innovation, which increases the demand for its products. The company’s reputation for producing high-quality, unique products also gives it high pricing power, enabling it to set high prices for its products and thus increase profit margins. Apple’s cash flow also significantly increases market capitalization because it enhances trading safety in Apple stocks. Therefore, the company can leverage its cash flow to survive market uncertainties.

Trends in stock price, dividend payout, and total stockholders’ equity. Relate recent events or market conditions to the directions you identified.

As mentioned, Apple’s stock price continues to increase and is anticipated to increase after the launch of new Mac laptops and the iPhone SE 3. The company’s stellar earnings for 2022’s first quarter may result in a high dividend per share and an increased stock price. The stock is still less than the end of 2021, which could reduce the dividend payout. However, the company may still increase quarterly dividend payments because it has maintained growing dividends after every fourth quarter. There has also been a rise in the purchase of Apple products following the prevalence of the use of information technology and the trend of working from home following the Covid-19 pandemic. An increase in sales translates to high-profit margins, thus increasing stock price and dividend payout.

Conclusion

Apple has maintained good financial performance over the years despite economic disruptions such as the recent one caused by Covid-19. The company has also attracted investors and carried high stock prices over the past five years. Based on the company’s financial information analysis and key performance indicators, I think it will meet its financial goals. For instance, the company will increase profitability and stock price due to the launch of new innovative products and the ability to maintain good cash flows. The company also has good sustainability, which is connected to the forecasts for revenue increase. Therefore, I would recommend purchasing Apple stocks because the increase in revenue and profit margins will increase the value of the stores, and investors trading in stores will be interested in purchasing Apple stocks. The company’s sustainability also makes it an ideal investment consideration for investors interested in buying stocks and holding them to sell later because there is a guarantee that stock value will increase.

References

Mullaney, T. (2022). ‘This is a big deal’: How Apple earnings can grow even if iPhone growth goes to zero. CNBC. https://www.cnbc.com/2022/02/02/how-apple-earnings-can-grow-even-if-iphone-growth-goes-to-zero-.html

Navellier, L. (2022, March 25). Expect renewed strength in AAPL stock after the year’s first Apple event. InvestorPlace. https://investorplace.com/2022/03/expect-renewed-strength-in-aapl-stock-after-the-years-first-apple-event/

Seitz, P. (2022). Is Apple Stock A Buy After iPhone Maker’s Earnings Report? Investor’s Business Daily. https://www.investors.com/research/apple-stock-buy-now/

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Apple Financial Performance and Key Performance Indicators

Imagine your manager has asked you to help with a presentation on the company’s financial performance at the company’s annual meeting.

Research financial information and key performance indicators for the company.

Write a 3-PAGE PAPER:
Identify key performance indicators for the company you selected, including the following:

The company and its ticker symbol
Cash flow from operations
Price-to-earnings ratio
Stock dividends and the yield, if any
Earnings per share ratio
Revenue estimates for the next 12 months
Revenue from the previous three years
Statement of cash flows and identify net cash from operating, investing, and financing activities over the past three years
Average trade volume.
Current stock price, 52-week high, and 1-year estimated stock price
Analysts’ recommendations for the stock (buy, sell, hold)
Market cap for the company

Relate the stock price to the price-to-earnings ratio.

Explain the market capitalization and what it means to the investor.

Evaluate trends in stock price, dividend payout, and total stockholders’ equity. Relate recent events or market conditions to the directions you identified.

Based on your analysis, determine whether you think the organization will meet its financial goals and the outlook for growth and sustainability, and explain why you recommend this stock for purchase.