final presentation - apple

7/26/2019 Final Presentation - Apple

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Arkansas State University

Apple Inc,

Dat Pham


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Apple Current price: $ Target price: $2

Recommendatio

Key Statistics

Current Price 108.83

52 Week Range $68.33 - 111.74

Market Capitalization ($billion) 500

Avg Daily Vol (Million) 54

Institutional Ownership(%) 63.0%

Beta 0.90

Dividend Yield 1.7%

Trailing P/E

17.30

Price/Sales 6.43

Enterprise Value/EBITDA 10.73

Source: Yahoo Finance


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Business Description

Apple Inc., formerly Apple Computer, Inc., is amultinational corporation that produces consumeelectronics, computer software, and commercial

Founders Steve Jobs and Steve Wozniak createdComputer on April 1, 1976.

Today, Apple is the largest technology firm in thewith annual revenues of more than $60 billion.


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Product line-up

Computers Cellular phones MP3 players

Software Online Music Vendor Distributes third party computer AccessoriesApple TV an online television adapter


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Apples five forces analysis

012345

barrier toentry

competition

supplierpower

buyerpower

subtitutes


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Industry

Porters five forces (radar chart)

0

1

2

3

4

5

barrier toentry

competition

supplierpower

buyer power

subtitutes


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Current Events

Financial Results Apple reported highest ever 3thquarter revenue and earnings:

Revenue increase over 6.22 billion or 29%, driven by strong iPad and iPhone sales

Robust growth from iTunes revenue

2013 Fiscal Year EPS: $5.68, up 73%

iPhone Apple sold over 38.8 million iPhones over the last quarter and 500 million iPhone in total

Apple will also unveil a new retina MacBook The ultra-portable laptop is expected to be 50% thinner than the existing MacBook

Will contain flash-based memory instead of a disc drive.

Retina screen brings better image and video quality for users


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Revenue

During the analyzed period ( from 2009 to 2013total revenues increased continuously. It went uaround $130 billion dollars from $42905 in 2009

170000 in 2013 (by the end of 2013 it quadrupl That indicates a strong positive trend.


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Revenue


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Apples Market Share in the US


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Geographical Sales

The Company manages it business on a geograpbasis. The operating segments consist of AmericEurope, Japan, and Retail.


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Ratio and Dupont analysis

Liquidity

Current Ratio 1.67x

Quick Ratio 1.64xProfitability

Profit Margin 37.62%

Operating Margin 29.35%

Efficiency

Inventory Turnover 60.43x

Receivable Turnove 8.28Asset Turnover 0.83

Leverage 2.08


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Data Source Actuals Forecasts

Year 2011 2012 2013 Year +1 Year +2 Year +3 Year +4 Year +5 Y

1 2 3 4 5

Revenue Ann IS 108,249.00 156,508.00 170,910.00 216,870.74 256,009.26 313,532.89377,048.84 457,600.61471,3

growth

44.6% 9.2% 26.9% 18.0% 22.5% 20.3% 21.4%

Cost of Goods Sold includingD&A

Ann IS

-64,431.00

-87,846.00

-106,606.00

-143,134.69

-168,966.11

-206,931.71

#########

-302,016.40

####

%Revenue

-59.5% -56.1% -62.4% -66.0% -66.0% -66.0% -66.0% -66.0% -

Gross Profit =Rev-COGS 43,818.00 68,662.00 64,304.00 73,736.05 87,043.15 106,601.18128,196.60 155,584.21160,2

gross margin

40.5%

43.9%

37.6%

34.0%

34.0%

34.0%

34.0%

34.0%

SGA Ann IS 0.00 0.00 0.00 0.00 0.00

%Revenue

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

Operating Income (EBIT) =GP-SGA 43,818.00 68,662.00 64,304.00 73,736.05 87,043.15 106,601.18128,196.60 155,584.21160,2

operating margin

40.5% 43.9% 37.6% 34.0% 34.0% 34.0% 34.0% 34.0%

Non-cash charges (D&A, etc.) Ann CF 5,850.00 9,422.00 10,151.00 12,880.78 15,205.37 18,621.92 22,394.38 27,178.65 27,9

%Revenue

5.404%

6.020%

5.939%

5.788%

5.916%

5.881%

5.862%

5.886%

5

Capital Expenditures Ann CF -7,452 -9,402 -9,076 -13,158.19 -14,835.78 -17,947.37 -22,103.29 -26,512.52 -27,3

%Revenue

-6.8841% -6.0074% -5.3104% -6.0673% -5.7950% -5.7242% -5.8622% -5.7938% -5.7

Changes in NWC

Ann CF

5,760.00

-299.00

6,480.00

6,449.37

5,610.23

9,360.75

10,244.19

12,040.89

13,0

%Revenue

5.3211% -0.1910% 3.7915% 2.9738% 2.1914% 2.9856% 2.7169% 2.6313% 2.7

Free Cash Flow to the Firm See formula 36,670.96 50,668.20 55,268.57 60,884.11 70,565.84 89,133.38105,657.15 128,150.51132,6

Present Value 54,458.06 56,456.10 63,784.47 67,628.80 73,368.78

1,507,818.48termi

Sum of PVs (Firm Value) 655,953.10 863,256.87then d

Add: Cash 40,546.00 Ann BSCost of

Capital Inputs

Minus: Debt

16,960.00 Ann BS or disclosure in annual report10-year T-bond rate

2.50%

Equity Value

6795390000=V + cash - debt Market risk

premium

11.00%Estim

Shares Outstanding

5860.00Ann IS or yahoo!Finance key statistics (=mcap/price) Beta

1.26Regre

Intrinsic Value$ 205.21 Cost of Equity 11.2400%CAPM

Current Price$ 99.62 Cost of Debt

0.00%Ann I

Upside Potential 105.99% WACC

11.8000%From


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F C F V A L U A T I O N

Sales growth of 10% over the next five years

Long-term free cash flow growth of 8% Equity value of firm: around $679 billion

FCF price target: $205


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Valuation Cost of capital

Cost of debt: 0%

Cost of equity (CAPM): 11.24%

Tax Rate: 25.29%

Beta: 1.26 WACC: 12.59%


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Capital StructureTotal Debt to Total Equity31.64Total Debt to Total Capital

24.04Total Debt to Total Assets15.22Long-Term Debt to Equity25.99Long-Term Debt to Total Capital

19.74


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Risk Analysis

Macroeconomic- The gloomy global economic conditions, tighter accecredit, increase of unemployment could lower the demcompany`s products and services. Political & regulatory uncertainties- Regulations in countries relating to mobile communand software security requirement usually change increstrictions on production, manufacture or network carights, putting negative effect on company`s productdesign and application experience.


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BUY

Innovationbrand design

proven

Successful

MassiveBrand Power

High Salesand Dividend

Growth

C O N C L U S I O N

final presentation - apple

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