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Apple rallying in 2017

Summary (from latest annual and quarterly report)

  • Total stockholders' equity : 132.39 billion USD
  • Market Cap is 755.60 billion USD ( last price of the stock is 144.02 USD)
  • Apple Inc designs, manufactures, & markets mobile communication & media devices, personal computers, & portable digital music players, & sells a variety of related software, services, accessories, networking solutions, & third-party digital content.
  •  Total stockholders' equity has increased from 128.24 billion USD in 2015 to 132.39 billion in 2017
  • Company has 16.37 billion USD in cash on account (from latest quarterly report)
  • In 2017 company has 73.55 billion USD long-term debt, short – term debt is 13.99 billion USD (In 2015 company had 53.46 billion USD long-term debt , short-term debt was 10.99 billion USD)
  • Company's revenue decreased in 2016 to 215.63 billion USD from 233.71 billion in 2015
  • Net income in 2016 was 45.68 billion USD, Net income in 2015 was 53.39 billion USD
  • In 2016 company paid 12.15 billion USD dividend to its shareholders

 

Opinion about the company

Fundamentally it is a very good company and in the future we can expect its growth (Total debt is very big (87.54 billion usd), big amount of cash on company's account, ROE is around 30 %).

 

The price of the stock is moving in "uptrend" but the risk/reward is currently unattractive

Net sales declined 8% or $18.1 billion during 2016 compared to 2015, primarily driven by a year-over-year decrease in iPhone net sales and the effect of weakness in most foreign currencies relative to the U.S. dollar, partially offset by an increase in Services. The market has had an incredible rally since the election. And as a leader of this run, Apple has rallied at an annualized rate of 137%. The stock price has also trended higher following the announcement of Q1'17 earnings. Some analysts believe the stock is poised for sustained momentum upon the realization that Apple may deliver better than expected iPhone comps for the full balance of FY'18. Analyst at Morgan Stanley estimates that unit shipments in China will grow 65% when compared to FY'16 Chinese unit shipment figures, which is quite significant. Typically, China composes 20% of geographic unit shipments for Apple's iPhone unit. In the context of the basic parameters of the smartphone market, India is where China was six years ago. The demographic structure of the Indian market is more preferable for Apple than that of the Chinese market according to some analysts (in 2016, iPhone sales in India grew by 50%).

On January 31, Apple announced financial results for its fiscal 2017 first quarter ended December 31, 2016. The Company posted all-time record quarterly revenue of $78.4 billion and all-time record quarterly earnings per diluted share of $3.36. These results compare to revenue of $75.9 billion and earnings per diluted share of $3.28 in the year-ago quarter. International sales accounted for 64 percent of the quarter’s revenue. A month ago, several brokerage houses raised Apple Inc.'s stock price target to ~$150. Guidance for its fiscal 2017 second quarter is revenue between $51.5 billion and $53.5 billion ( forecast for 2017: net sales of $228.6 billion, EBITDA of $74.5 billion, net income between $40 and $45 billion). I see limited upside and my opinion is that price of the stock is little overvalued, the risk/reward is currently unattractive ( although I think that this is an excellent company). I also think the good news on Apple are already priced in and that stock could have a big fall with some negative news or with market correction ( for now US stock markets are still in the "BUY" zone and there is no fear of the "bear" market. Stocks remain expensive, but index inflows keep supporting the market, and for now there is no sign of a major dip emerging any time soon). AAPL stock price is correlated with situation in USA, global economic situation also affect on the price of this stock (especially  stock markets in USA..). AAPL stock price is highly correlated with NDX, SPX and DJIA.

 

Technical analysis

When we look at one year chart we can see that price of AAPL stock is moving in "uptrend". As long the price is above this trend line and $130 this stock is in the "BUY" zone and  there is no indication of trend reversal. If the price falls on the trendline and if we get "bullish" confirmation candle it would be a very good entry point. Trend line represents very strong support level, if the price breaks this trend line( and $120) it would be a very strong "SELL" signal and we have a open way to $100. If the price jumps above $150 (short term resistance level) that would be a confirmation of "BULLISH" trend and open way to $160/$170.

Conclusion - business and revenues should grow in the future but price of the stock is expensive

Apple is one of the most recognized brands in the world. The market has had an incredible rally since the election. And as a leader of this run, Apple has rallied at an annualized rate of 137%. Some analysts believe the stock is poised for sustained momentum upon the realization that Apple may deliver better than expected iPhone comps for the full balance of FY'18. Guidance for its fiscal 2017 second quarter is revenue between $51.5 billion and $53.5 billion ( forecast for 2017: net sales of $228.6 billion, EBITDA of $74.5 billion, net income between $40 and $45 billion). I see limited upside and my opinion is that price of the stock is little overvalued, the risk/reward is currently unattractive ( although I think that this is an excellent company). I also think the good news on Apple are already priced in and that stock could have a big fall with some negative news or with market correction. AAPL stock price is correlated with situation in USA, global economic situation also affect on the price of this stock (especially  stock markets in USA..). AAPL stock price is highly correlated with NDX, SPX and DJIA.

 

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