Insights

Apple (NASDAQ:AAPL) in 5 charts

A quick and easy visual guide to what makes Apple a powerhouse growth stock.
The post Apple (NASDAQ:AAPL) in 5 charts appeared first on Motley Fool Australia. –

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

variety of asx shares and stock charts such as pie charts, bar chart and line graphs

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Most investors are able to keep their focus on a particular company’s proverbial “bigger picture.” Sure, the occasional unexpected headline might distract and buffet a stock every now and then, but for the most part, the market has a knack for evaluating a company and pricing shares at appropriate, risk-adjusted levels. The hard part sometimes is understanding what the financial metrics are really saying.

An investor can listen to some of the data being explained and easily get what it’s trying to say, but there are some ideas that are just easier to understand in pictures than they are in words. The financial metrics regarding consumer technology giant Apple Inc. (NASDAQ: AAPL) are no exception to this reality.

Here are five financial “pictures” that will visually help any investor gain a better understanding of where this tech company is, and where it seems to be going.

1. For better or worse, Apple is a Western company

Apple’s CEO Tim Cook has always been bullish on China as a big growth driver for the company, even since 2017 when the iPhone’s sales tanked in that particular market. Much to the delight of shareholders, China’s consumers became interested in its wares again by the end of that year.

The fact of the matter is that the other side of the planet remains a much more important market for Apple right now. The Americas alone account for nearly half of Apple’s business, while Europe makes up about a fourth of the company’s top line.

The majority of Apple's revenue comes from the Americas, and then Europe, despite its China push.

Data source: Apple quarterly reports. Chart by author.

Of course, Europe and the Americas are a relatively bigger deal now than they were then, largely because China and the rest of Asia still aren’t exactly growing for Apple.

2. Services growth is offsetting the iPhone headwind

Apple may have stopped reporting the number of iPhones it sells as of early 2019, but a close look at its quarterly results since then reminds us the company never stopped reporting total iPhone revenue. That may be the more important figure of the two, especially given Apple’s deliberate development of its services arm that reflects app and media revenue.

Apple's services revenue has offset any weakness for its iPhone business.

Data source: Apple quarterly reports. Chart by author.

To this end, notice how services revenue has pretty much offset any headwinds related to saturation of the smartphone market, and now accounts for roughly one-fifth of the company’s total business. That’s ultimately a function of how many iPhones are still in active use, and not necessarily tethered to new phone sales.

3. Big operating margins for services

Sales of physical products like Macintosh computers and the iPhone may contribute more to the bottom line, but not as much as those product revenues might suggest. The operating margins on digital goods and services (revenue minus the costs associated with offering apps, videos, music, etc.) is more than twice the profit margin percentages of hardware. Although they only make up around one-fifth of Apple’s sales, services drive about one-third of the company’s operating earnings.

Apple's margins on digital services are much higher than profit margins on hardware like the iPhone.

Data source: Apple quarterly reports. Chart by author.

4. Heavy cash flows easily fund the dividend, and more

Ergo, the steady revenue and income production of digital services, in conjunction with its consistently marketable iPhone, makes Apple a cash-generating machine even in more challenging environments. Notice that cash flow easily covers the amount of earnings the company’s been dishing out in the form of dividends.

Apple's cash flow far exceeds its dividend.

Data source: Thomson Reuters Eikon. Chart by author.

5. More revenue and earnings growth in store

And where’s it all going? Analysts are modeling more of the same growth into the future, anticipating a strong rebound next year out of this year’s lull. Respectable single-digit sales growth is in the cards for 2022, which mirrors the pace established before the COVID-19 pandemic took hold.

Apple's revenue and earnings are projected to grow at their well-established pace through 2022.

Data source: Thomson Reuters Eikon. Chart by author.

Per-share earnings are expected to grow at an even faster clip, thanks to continued stock buybacks that mathematically make each share more profitable, by reducing the total number of them. Of course, this has long been the case for Apple.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of June 30th

More reading

James Brumley has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple. The Motley Fool Australia has recommended Apple. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Apple (NASDAQ:AAPL) in 5 charts appeared first on Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!