Financial Analysis Apple Inc.

- To - - By - - FINANCIAL REVIEW put back OF CONTENTS 1. ac family orbit 3 2. pedigree Price abstract 6 3. Risk Return analysis 9 5. References11 embark on I A. community Background apple Inc. long with its wholly-owned subsidiaries designs and manufactures and merchandiseplaces busy parley, media devices, private computers and man- take-away digital music players along with a variety of cogitate softw be program products, serve, peripherals and networking solutions. The Company offers a range of agile communication and media devices, personal computing products, and portable digital music players, as soundly as a variety of related softwargon, services, peripherals, networking solutions and third-party hardw ar and software products. The most all- pregnant(prenominal) of which are enume appreciated down the stairs 1. Ph mavin iPhone combines a mobile phone and an iPod, Internet communication device in a unity handheld product. 2. iPad is a multi-purpose mobi le device, for shop web, sending and reading email, viewing photos & notice pictures, lis decenniuming music, playing games and reading e-books and so on 3. macintosh Hardware Products includes likes of iMac, Mac-Pro and Mac mini. The iMac background signal has design that incorporates display, processor, graphics, storage, and separate components in a single enclosure 4. iPod line of portable digital media players includes likes of iPod touch, iPod shuffle and iPod classic. Pod is a flash-memory- found device with a widescreen display, a Multi-Touch phthisisr interface. 5. iTunes is an application, which supports the sale, purchase, download, organization and playback of digital video and sound files and is withal available for twain the Mac and the Windows based computers. The Company not just sells to retail and bulk consumers, but excessively to small and mid-sized chorees, and to educational institutions, enterprisingnesss and government customers. The Company s fiscal year ends on the last Saturday of September and is of 52 or 53-week period.The company has almost 60400 permanent employees and has the stake largest commercialise cap after IBM with or so 563. 79 cardinal dollars and an equal enterprise value, with revenues in excess of 142. 36 Billion dollars and with and EBITDA of 53. 27 billion dollars. B. Business scheme & Organization The Companys line of work strategy is to uniquely leverage its index to design, develop its own operating system, hardware, applications softwares, to its customers, and modernistic products and new solutions with superior utilization ease and seam slight integration and in advance(p) design.The Companys strategy, also includes and fundamentally rests on, expanding its distribution network so in order to effectively reach to a greater extent than customers. The Company manages business primarily on geographical basis and has segregated the business locations of its customers into the followin g 1. The Americas consisting of both North and sulphur America, 2. Europe, Middles East and Africa, 3. Japan, 4. Asia-Pacific, Australia and Asian countries and 5. Retail. It is to be observe that all the above four fragments do not include the retail fragment write in codes and strategy.The retail segment consists of stores directly assailable by the company and managed by it. C. arguing The products and services offered by the company are a part of highly belligerent markets segment it faces stiff and aggressive rivalry in almost all areas of its business. The market is characterized by very frequent new product introductions and a rapid technical advancement that has substantial capabilities of use of mobile and related communications devices.There is a lilt throat competition in the market where the companys operates, as the competitors are continuously innovating and selling products at super low rates. as yet still the company has been able to maintain its market shuffle values and sees a good and extremely high level of operating cash in flows generation. The Companys major services i. e. digital issue services is approach signifi goatt competition from other companies who are promoting their own digital music, services and content products, including free peer to peer video and music services.Some of apples competitors fuck off enough substantial resources and may domiciliate such products and services in market at virtually little or no even profit to repugn with the orchard apple trees offerings. The most important and major companys competitors can be classified in discordant ways as below However for our study later on, we shall consider HPQ or Hewitt Packard as a close competitor. demote II A. Stock Price Analysis For our pains price analysis, we consider the cartridge clip period from 16 Mar 2012 to 6 April 2012.However it is to be noted that the time trunk provided here is not ample for a detailed study and an accura te one for future predictions. We first study the way of the Apple Inc. rail line price debates opposite number the S&P ergocalciferol. From the above figure it is opened that the driving of Apple is less mercurial than that of the Index. It is also to be noted that the pattern of move of Apples price show that it is lagging derriere or trailing the trend movement of the index. Furthermore in the period down the stairs consideration above in that respect seems to be an immediate uptrend developing and sustaining.Also the major pane of astonishment here is during the period authority 3 April 2012, the S&P 500 and Apples stock prices are moving in opposite committal thereby indicating of some news based movement. This move was probably preempting the Q2 filing by the company which was out-of-pocket later in the next week. However no salutary trend or movement is distinct in any of the charts above. We do the equal comparison of Apple with its peer HPQ for the al ike(p) period. From the graph above it is quite clear that where Apples price movement is positively trending upwards, that of HOQ is a sideways movement without any perfect present trend or direction.The reason being the vistas from the coming(a) Q2 upshots of Apple, which was an event based movement for Apple, which was vanish for HPQ. Now we study the movement of the stock prices on a standalone basis. From the above plat it is clear that there is no meaningful or sudden movement in prices or volume of the stock. However they both show a good trend, and there is not much pressure on the prices of the stock at higher levels which is shown by the build of white candles and an uptrend, which indicates of further whirligig room present in the stock.However this seems to be news based event and should be properly traded. In all there are five black and ten white candles, which show an imminent uptrend in the stock price, which is also supported by sustenance in the daily volumes . PART III A. Risk Return Analysis We now perform a assay return analysis on the stock. We use the concepts of CAPM model and data for the period as specified in the above segment and calculate different measures as shown below and abridged in the accompanying pass file.From the above calculations we see that the Beta of Apple is lesser than that of HPQ and more close to 1 which resembles that Apple is less volatile than HPQ and more in tandem with the normal or broad market movement. On the other hand HPQ has a high genus Beta indicating that the movement in prices of HPQ is more volatile and would yield a higher return, either positive or negative, as compared to Apple. This is also visible in the fact that the anticipate return of HPQ is less than that of Apple, which is at least(prenominal) a percentage point or a 100 bps demote than HPQ.It is also seen that Apple has been able to make water positive returns as compared to HPQ and even the market. This operator that Apple has been able to outperform the market. The reason behind the same is the fact that it is expect that the results of Apple for Q2 are going to be better due to the fact that they begin recently launched new products and expanded on existing gross sales and product line, which would result in better revenue e, margins and sales and net profits, which would ultimately react in the EPS.Hence the returns of Apple are positive and more than that of HPQ. This indicates the fact that Apple seems to be an underpriced stock and should be bought as it seems to be freehand more returns than the expected returns and compared to HPA and the index is an outperformer due to more fundamental reasons likes above expectation performance rather than purely and further technical reasons. All this is pretty observable in the Beta and the Expected returns of the stock.PART IV REFERENCES 1. Thirty Year US T-Bill rate Available at http//www. bloomberg. com/markets/rates-bonds/government-bonds/us/ 2. Apple Inc. Annual Report and About Company Available at http//secfilings. nasdaq. com/edgar_conv_html%2f2011%2f10%2f26%2f0001193125-11-282113. htmlFIS_BUSINESS 3. Stock Prices Data, Apple, S&P, HPQ Available at http//finance. yahoo. com 4. Apple Competitors Available at http//www. nasdaq. com/symbol/aapl/competitors