When Apple Inc. (NASDAQ:AAPL) released its most recent earnings update (29 September 2018), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Apple’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not AAPL actually performed well. Below is a quick commentary on how I see AAPL has performed.
Commentary On AAPL’s Past Performance
AAPL’s trailing twelve-month earnings (from 29 September 2018) of US$60b has jumped 23% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 6.8%, indicating the rate at which AAPL is growing has accelerated. What’s the driver of this growth? Let’s see if it is merely owing to industry tailwinds, or if Apple has seen some company-specific growth.
In terms of returns from investment, Apple has invested its equity funds well leading to a 56% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 16% exceeds the US Tech industry of 8.8%, indicating Apple has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Apple’s debt level, has declined over the past 3 years from 34% to 28%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 14% to 107% over the past 5 years.
What does this mean?
Though Apple’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Apple gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Apple to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for AAPL’s future growth? Take a look at our free research report of analyst consensus for AAPL’s outlook.
- Financial Health: Are AAPL’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 29 September 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.