Apple Is Tech’s Best Value Stock

Chart shows Apple leading FAANG stocks for a one-year period
Chart shows Apple leading FAANG stocks for over five years

Apple is Tech’s Best Value Stock

Apple has been very consistent with its margins and cash flows. The company’s operating margin of 30.82% and the net profit margin of 25.71% are excellent, while most tech companies are currently struggling with the bottom line. It also has an outstanding free cash flow margin of 26.37%. The company has also been shareholder-friendly since it consistently repurchases shares.

Chart showing Apple and Wallmart % Quarterly Revenues

Apple’s recent results

Apple’s revenue in the recent quarter grew by 9% year-over-year to $97.3 billion. The company’s revenues beat Wall Street analysts estimates by 3.5%.

Looking forward

iPhone sales account for the majority of its revenues (accounted for 52% of the total sales in the recent quarter), which helped the company reach record FY 2021 revenues of $365.82 billion, a YoY growth of 33%.

How does it compare to FAANG companies?

The company’s operating margin of 30.82% is the highest among the FAANG companies. Meta’s operating margin of 30.54% comes second and Amazon has the lowest operating margin of 3.15%.

Chart showing FAANG companies operating margin (Quarterly)
Chart showing FAANG companies net income
Chart showing FAANG companies PE Ratio (Forward)
Chart showing FAANG companies Free Cash Flow

Risks to consider:

Apple’s revenue growth has been decelerating. FY 2021 was an exception as revenue grew by 33%. However, growth in the FY 2020 was 5.5% and in the FY 2019, revenue fell by 2%. According to the Wall Street analysts revenue is expected to grow 7.7% in this fiscal year ending September 2022.

Conclusion:

We recently covered Apple in a webinar where we discussed the two leading FAANGs in terms of sizable catalysts on the horizon that will help them to remain on the Top 5 for World’s Most Valuable Companies. Apple was not one of the two FAANGs discussed as the company does not a massive catalyst on the horizon like two of its peers — — yet this is entirely irrelevant to value investors. Thus, the stock has outperformed in an environment when value stocks are favored.

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Beth Kindig

Beth Kindig

CEO and Lead Tech Analyst for the I/O Fund with cumulative audited results of 141%, beating Ark and other leading active tech funds over four audit periods in 2