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7/26/2019 Final Presentation - Apple
1/19
Arkansas State University
Apple Inc,
Dat Pham
7/26/2019 Final Presentation - Apple
2/19
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
7/26/2019 Final Presentation - Apple
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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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7/26/2019 Final Presentation - Apple
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Industry
Porters five forces (radar chart)
0
1
2
3
4
5
barrier toentry
competition
supplierpower
buyer power
subtitutes
7/26/2019 Final Presentation - Apple
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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