Apple Inc. (NASDAQ: AAPL)
Analysis as of February 24, 2025

 

1.  Company Overview
Apple Inc. is a global consumer electronics and software company best known for its flagship products and services such as the iPhone, iPad, Mac, Apple Watch, and Apple TV, alongside a rapidly growing suite of subscription services (Apple Music, Apple TV+, iCloud, etc.). The company’s ecosystem is built on a seamless integration of hardware, software, and services, fostering strong brand loyalty and high customer retention.

Key Business Segments

• iPhone & Hardware:
  Core revenue drivers include the iPhone, Mac, iPad, Apple Watch, and AirPods.
• Services:
  A diverse portfolio of digital services (App Store, Apple Music, Apple TV+, Apple Pay, etc.) that continues to expand as a significant revenue stream.
• Wearables, Home & Accessories:
  Apple Watch, AirPods, and smart home devices contribute to a robust accessories ecosystem.

2.  Financial Performance

a. Revenue and Growth

• TTM Revenue (as of Dec 28, 2024): $395.76 Billion
• YoY Revenue Growth (TTM): ~2.61%

Analysis:
After years of robust expansion, Apple’s revenue growth has moderated slightly. Nonetheless, the company continues to benefit from steady demand for its flagship products and increasing traction in its services segment.

b. Profitability

• Net Income (TTM): $96.15 Billion
• EPS (TTM): $6.28
• Profit Margin (TTM): ~24.30%
• Return on Equity (TTM): ~136.52%
• Return on Assets (TTM): ~22.52%

Analysis:
Apple maintains strong profitability due to premium pricing, a loyal customer base, and significant economies of scale. The exceptionally high ROE reflects the company’s share repurchase programs and effective capital allocation strategies.

c. Margins

• Gross Margin (TTM): ~46.52%
• Operating Margin (TTM): ~31.76%
• EBITDA Margin (TTM): ~34.71%

Analysis:
Healthy margins stem from Apple’s integrated hardware-software ecosystem and its ability to command premium prices. As services become a larger portion of revenue, overall margins have remained elevated.

d. Cash Flow

• Operating Cash Flow (TTM): $108.29 Billion
• Capital Expenditures (TTM): ~$10.00 Billion
• Free Cash Flow (TTM): $98.30 Billion
• FCF Margin (TTM): ~24.84%

Analysis:
Substantial free cash flow allows Apple to invest heavily in R&D, supply chain efficiencies, and strategic acquisitions, while also returning capital to shareholders via buybacks and dividends. This underscores the stability of its cash-generative business model.

3.  Balance Sheet

• Total Assets: $344.09 Billion
• Total Liabilities: $277.33 Billion
• Shareholders’ Equity: $66.76 Billion
• Total Debt: $96.80 Billion
• Cash & Marketable Securities: $141.37 Billion
• Net Cash (Debt): $44.57 Billion
• Debt/Equity: 1.45
• Current Ratio: 0.92

Analysis:
Apple’s balance sheet remains robust, though it carries more debt than in previous years. The company’s large cash reserves still outweigh total debt, maintaining a solid net cash position and ample financial flexibility.

4.  Valuation

• Current Stock Price (as of Feb 24, 2025): $245.55
• Market Capitalization: $3.72 Trillion
• PE Ratio (TTM): 38.99
• Forward PE: 32.47
• P/FCF (TTM): 37.53
• PEG Ratio: 3.42

Analysis:
Apple’s valuation multiples remain elevated, reflecting market confidence in its steady growth, strong brand, and recurring services revenue. Despite a higher PE relative to historical averages, investors appear willing to pay a premium for Apple’s resilience and ecosystem advantages.

5.  Market Performance

• 52-Week Range: $164.08 – $260.10
• 52-Week Price Change: +35.98%
• Beta: 1.20

Analysis:
Apple’s share price has significantly outperformed broader indices over the past year, partly driven by strong consumer demand and expansion of high-margin services. A beta of 1.20 suggests somewhat higher volatility relative to the broader market.

6.  Financial Health and Risks

a. Liquidity & Leverage

• Current Ratio: 0.92 indicates near-term liabilities exceed near-term assets, though Apple’s massive cash position partially mitigates this risk.
• Debt/Equity: 1.45, signifying increased leverage but still manageable given robust cash flows.

b. Profitability & Cash Flow

• High Margins: Reflects Apple’s premium brand positioning and services growth.
• Strong Cash Flow: Facilitates product innovation, capital returns (buybacks, dividends), and potential M&A.

c. Operational & Market Risks

• Product Concentration: iPhone revenue remains a large portion of overall sales, potentially creating vulnerability if smartphone demand weakens.
• Supply Chain Disruptions: Geopolitical tensions and global component shortages can impact production and product availability.

d. Regulatory & External Risks

• Regulatory Scrutiny: Issues around app store policies, antitrust, and data privacy could affect revenue streams or operational structure.
• Macro Environment: Economic downturns can slow consumer spending on premium devices.

7.  Conclusion

Pros

• Powerful Ecosystem: Seamless integration of hardware, software, and services fosters customer loyalty.
• High Margins & Cash Flow: Strong profitability and free cash flow enable ongoing innovation and shareholder returns.
• Brand Equity: Apple’s brand remains one of the most valuable worldwide, supporting premium pricing and repeat purchases.

Cons

• High Valuation: Elevated PE and PEG ratios suggest less margin for error in execution.
• Product Dependence: iPhone sales still dominate revenue, posing concentration risks.
• Regulatory & Geopolitical Pressures: Ongoing scrutiny could lead to changes in app store commissions or supply chain realignments.

Disclaimer
This analysis is for informational purposes only and does not constitute investment advice or a recommendation. Investing involves risks, including possible loss of principal. Past performance is not a guarantee of future results. Investors should conduct their own research or consult a financial professional before making any investment decisions.