A detailed quantitative analysis by Apple Inc. (AAPL) is linked here. Below are some highlights from the analysis linked above:
Company description: Apple Inc. is a leading supplier of hardware including iPhone smartphones, iPad tablets, Mac computers, wearables, and iPod digital media players.
Fair value: When calculating the fair value, I take into account the differential fair value of the present value MMA along with these four fair value calculations. A detailed description can be found on page 2 of the linked PDF:
1. Avg. High yield price
2. 20-year DCF award
3. Avg. P / E price
4. Graham Number
AAPL trades at a premium to all four of the above ratings. Including the NPV MMA differential, the stock is trading at a premium of 439.0% over the calculated fair value of $ 23.27. AAPL does not deserve any stars in this area.
Dividend analytical data: There are three possible stars and three key metrics in this section. A detailed description can be found on page 2 of the linked PDF:
1. Free cash flow payout
2. Debt to total capital
3. Key Metrics
4. Dividend Growth Rate
5th years Div. growth
6. Rolling 4 year old Div. > 15%
AAPL earned a star for 1.) above in this section. A star was earned because the free cash flow payout ratio was less than 60% and there were no negative free cash flows in the last 10 years. The company has paid a cash dividend to shareholders every year since 2012 and has increased its dividend payments for 10 consecutive years.
Dividend Income vs. MMA: Why would you take the equity risk and invest in a dividend stock when you could get a better return on a much less risky money market account (MMA) or a government bond? This section compares that stock’s earning power to a High performance MMA. There are two points covered in this section. A detailed description can be found on page 2 of the linked PDF:
1. NPV MMA Diff.
2. years to> MMA
The negative NPV MMA Diff. means that on a dividend basis, the dividend income from an investment in AAPL would be less than a similar amount invested in MMA, earning a 20 year average rate of 2.74%. If AAPL increases its dividend to 6.5% per year, it will never match an MMA that gives an estimated 20-year average rate of 2.74%.
Peers: The company’s peer group includes: Microsoft Corporation (MSFT) with a yield of 0.9%, Oracle Corp. (ORCL) with a yield of 1.6% and Alphabet Inc. (Toget) with a yield of 0.0%.
Conclusion: AAPL did not deserve any stars in Fair Value, earned one star in Dividend Analytical Data and did not deserve any stars for a total of one star in Dividend Income vs. MMA. This means that AAPL is quantitatively referred to as 1-star Very weak Warehouse.
With my D4L-PreScreen.xls Model, I decided that the stock price would have to fall to $ 18.36 before AAPL’s NPV MMA differential rose to the minimum of $ 2,500 that I’m looking for on a stock with 10 years of consecutive dividend increases. At that price, the stock would generate a return of 4.6%.
Resetting the D4L-PreScreen.xls The dividend growth rate model and solution required to generate the targeted MMA differential of $ 2,500. The calculated rate is 23.5%. This dividend growth rate is higher than the 6.5% used in this analysis, so there is no margin of safety. AAPL has one Risk assessment of 2.25, which it classifies as a medium risk stock.
AAPL is a premium brand with high demand. With low free cash flow of 16% (versus 21%), relatively high total capital debt of 64% (versus 51%), and large cash holdings, AAPL is well positioned to grow dividends for years to come. The stock trades well above its calculated fair value price of $ 23.27. As a result, I am unlikely to add to my position in the stock anytime soon.
Disclaimer: The material presented here is for informational purposes only. The above quantitative stock analysis, including the star rating, is mechanically calculated and based on historical information. The analysis assumes that the share will develop in the future as in the past. In general, this is never true. Before buying or selling stocks you should do your own research and arrive at your own conclusion. Please see my disclaimer for more information.
Full disclosure: At the time of this writing, I was long in AAPL (0.3% of my dividend growth stock portfolio).
On the subject of matching items:
– Dividend stock analysis from Omega Healthcare Investors, Inc. (OHI)
Tags: AAPL, MSFT, ORCL, toget,