Since February 2025, Apple has been in a holding pattern, posting a small loss of 3.7% while floating around $219.26. The stock also fell short of the S&P 500’s 5.3% gain during that period.
Is now the time to buy AAPL? Or does the price properly account for its business quality and fundamentals? Find out in our full research report, it’s free.
Why Does AAPL Stock Spark Debate?
Creator of the iPhone and App Store, Apple (NASDAQ: AAPL) is a legendary developer of consumer electronics and software.
Two Things to Like:
1. Operating Reveals a Well-Run Organization
Operating margin is an important measure of profitability for Apple. It’s the portion of revenue left after accounting for all operating expenses – everything from the cost of sales we talked about earlier to salaries, product development, and administrative expenses.
Apple has been a well-oiled machine over the last five years. It demonstrated elite profitability for a consumer discretionary business, boasting an average operating of 30.4%. This was especially robust given its large hardware revenue component.
2. New Investments Bear Fruit as ROIC Jumps
A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, Apple’s ROIC has increased significantly over the last few years. This is a great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.
One Reason to be Careful:
Revenue Growth
Long-term growth reigns supreme in fundamentals, but for big tech companies, a stretched historical view may miss emerging trends in AI. Apple’s recent performance shows its demand has slowed as its annualized revenue growth of 3.2% over the last two years was below its five-year trend.
Final Judgment
Apple’s positive characteristics outweigh the negatives. With its shares underperforming the market lately, the stock trades at 28.6× forward price-to-earnings (or $219.26 per share). Is now a good time to initiate a position? See for yourself in our comprehensive research report, it’s free.
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