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Proprietary Data Insights Financial Pros’ Top Stock Searches in the Last Month
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Why Our TrackStar Data Says Apple’s Next Move Is Critical |
Apple (AAPL) was the poster child for beating expectations. Now, it’s struggling to find growth. Net sales in Q1 were up 1.5%, while product sales were flat. But is there a turnaround coming? Financial pros went digging for information on the company’s Apple Vision and overseas growth, according to our TrackStar data. We followed their lead and found some interesting tidbits that could point to a course correction for the stock. Apple’s Business Did you know the iPhone was first introduced in 2007? It felt like a lifetime ago. Today, Apple, led by Tim Cook, carries on Steve Jobs legacy, introducing innovative products and services. The company breaks its business down into two categories:
Recently, Apple introduced its VR headset, Apple Vision, with a hefty $3,000 price tag. The reviews were fantastic.
Source: Apple Website Sales aren’t expected to take off immediately. But, with no other major product to introduce in 2024, this is expected to take center stage. Apple has a tough road ahead. It’s faced lawsuits over one of its watch models. And its sales growth in China is slowing as that country’s economy retrenches.
While services revenue should keep growing and improving overall margins, product sales, a much larger revenue driver, could see a pullback in 2024. Notably, the company has seen weakness in its iPad and wearables segment. Slower iPhone sales on top would add a further drag. Financials
Source: Stock Analysis Although the company’s stock did well in 2023, sales weren’t so hot. And if 2024 is below 2023, it would mark the first consecutive year drop in sales in recent history. Yet, margins and cash flow keep getting better as services make up a large proportion of sales. Incredibly, Apple generates $6.89 per share in cash or ~$107 billion. That funds its 0.52% dividend and roughly 3.25% per year share buyback. Although the company holds $108 billion in debt, it carries $70 billion cash and nearly $100 billion in marketable securities. That gives them enough money to buy Disney (which was rumored) in straight cash. Valuation
Source: Seeking Alpha Apple’s current valuation is cheap relative to its peers. Nvidia (NVDA) trades 86.7x cash, while Advanced Micro Devices (AMD) trades 172.2x cash. At least Microsoft (MSFT) is in the ballpark at 29.8x cash. Yet, even at 24.7x cash, Apple isn’t cheap. Growth
Source: Seeking Alpha Would you pay almost 25x cash for a company that isn’t growing? Every other company on this list is expected to see double-digit revenue growth in 2024, even Tesla (TSLA), despite waning EV demand. Apple’s only projected to see sales increase by 1.6% this year, and that’s probably generous. Profitability
Source: Seeking Alpha Most people don’t realize that Apple isn’t as profitable as some of its peers. For example, Nvidia and Microsoft have higher net income and free cash flow margins. And in case you didn’t see, Microsoft generates almost as much cash from operations as Apple. Our Opinion 6/10 We love Apple products and the company. But if you give us a choice amongst these five, it’s not the one we’d pick…right now. While we see things improving for it in 2025, there are too many headwinds in 2024 to justify its current multiple. |
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