Comprehensive Financial Analysis Report: Apple Inc. Stock Valuation

This report presents a financial analysis of Apple Inc., examining its financial performance and condition over a five-year trend. It delves into the company's profitability, considering factors like net profit margin, revenue volatility, and operating costs. The analysis includes an intrinsic valuation of Apple's stock, incorporating the required rate of return and dividend growth rate to determine an estimated share price. The report assesses the company's liquidity and return on capital, highlighting its debt levels and financial risk. Based on the analysis, the report offers a "Buy Recommendation," anticipating the stock to outperform and maintain a stable financial condition in the future. The report also includes ratio analysis, trailing returns, and an intrinsic valuation calculation in the appendix.

Running head: FINANCIAL ANALYSIS
Financial Analysis
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1FINANCIAL ANALYSIS
Table of Contents
Introduction......................................................................................................................................2
Valuation of Apple Incorporation....................................................................................................2
Conclusion and Recommendation...................................................................................................3
References........................................................................................................................................4
Appendix..........................................................................................................................................5

2FINANCIAL ANALYSIS
Introduction
Apple Incorporation the American Multinational Technology Company designs develops
and sells various kinds of consumer electronics, online services and computer software’s. The
company is listed in the NASDAQ Stock exchange with its ticker symbol as ‘AAPL’. The
current share price of the company is around $175.53 (Cortez et al. 2015).
The financial analysis of the company can be performed with the help of the financial
position and the financial performance of the company in the last five-year of trend. The
profitability of the company was assessed to be decreasing for the company when the company
reported falling net profit margin with the volatile revenue base for the company and the rising
operating cost for the company. The financial performance for the company has been volatile
due to the changing business conditions and macro-economic environment for the company
(Latif et al. 2014).
Valuation of Apple Incorporation
The intrinsic valuation for the share price of the company was also done by incorporating
the required rate of return of 12.83% and the dividend growth rate of around 29.63% was also
taken into consideration for the purpose of analysis. The intrinsic valuation of the stock was
determined to be around $258.71 and the current share price of the company is around $175.53
that shows undervaluation of shares when compared with the current prices (Morningstar, 2019).
The financial condition of the company has also been stable but the financial performance of the
company has been volatile due to the changing business scenarios and fast rapid changing
technology. The liquidity position of the company has been stable where the company has tried
to maintain sufficient amount of current assets for paying off the current liabilities of the

3FINANCIAL ANALYSIS
company. If we look at return on capital generated by the company it was around 15.23%. The
beta of the company was calculated to be around 1.12 times. The company is also having a
significant amount of long-term debt in the form of borrowings done by the company, the
increasing financial risk of the company with the changing business condition needs to be
analysed so that the financial position of the company stands stable (AAPL Company Financials,
2018).
Conclusion and Recommendation
After analysing the financial performance of the company and the financial condition, it
is to be noted that the company has performed comparatively well amongst other competitors
and has maintained the legacy of paying sustainable dividends. The trailing return of the
company when compared with the benchmark index and industry average has been well. The
stock would be given a “Buy Recommendation” after analysing the business strategies and the
various management approaches of the company. It is expected that the stock is expected to
outperform and the financial condition of the company is expected to outperform and remain
stable in the future term period.

4FINANCIAL ANALYSIS
References
AAPL Apple Inc Stock Quote Price | Morningstar. (2019). Retrieved from
https://www.morningstar.com/stocks/xnas/aapl/quote.html
AAPL Company Financials. (2018). Retrieved from
https://www.nasdaq.com/symbol/aapl/financials?query=ratios
Cortez, M. A. A., Ikram, M. I. N., Nguyen, T. T., & Pravini, W. P. (2015). Innovation and
financial performance of electronics companies: A cross-country comparison. Journal of
International Business Research, 14(1), 166-179.
Latif, M., Jaskani, J. H., Ilyas, T., Babar, Z. K., & Gulzar, H. (2014). Issues faced by Apple Inc
in smart phones industry. International Journal of Accounting and Financial Reporting,
4(2), 50.

5FINANCIAL ANALYSIS
Appendix
1) Ratio Analysis

6FINANCIAL ANALYSIS
2) Trailing Returns
3) Intrinsic Valuation of Apple Incorporation
Growth Rate" 29.63% Present Value at
Year Value DPS(t) or TV(t) 12.80%
0 DPS(0) 2.72
1 DPS(1) 3.53 3.125829787
2 DPS(2) 4.41 3.465934812
3 DPS(3) 5.3 3.692738639
4 DPS(4) 6.14 3.792555741
5 DPS(5) 6.82 3.734555143
5 TV(5) 439.97 240.9226138
258.71
175.53
Intrinsic value of Apple Inc.’s common stock
Current share price
Apple Inc., dividends per share (DPS) forecast

7FINANCIAL ANALYSIS