Here’s Why Apple (NASDAQ:AAPL) Has Caught The Eye Of Investors
The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Apple (NASDAQ:AAPL). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Apple with the means to add long-term value to shareholders.
How Quickly Is Apple Increasing Earnings Per Share?
If you believe that markets are even vaguely efficient, then over the long term you’d expect a company’s share price to follow its earnings per share (EPS) outcomes. That makes EPS growth an attractive quality for any company. It certainly is nice to see that Apple has managed to grow EPS by 28% per year over three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.
It’s often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company’s growth. Apple maintained stable EBIT margins over the last year, all while growing revenue 12% to US$388b. That’s a real positive.
You can take a look at the company’s revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.
While we live in the present moment, there’s little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for Apple?
Are Apple Insiders Aligned With All Shareholders?
We would not expect to see insiders owning a large percentage of a US$2.3t company like Apple. But we are reassured by the fact they have invested in the company. Notably, they have an enviable stake in the company, worth US$1.4b. This comes in at 0.06% of shares in the company, which is a fair amount of a business of this size. This should still be a great incentive for management to maximise shareholder value.
Should You Add Apple To Your Watchlist?
If you believe that share price follows earnings per share you should definitely be delving further into Apple’s strong EPS growth. This EPS growth rate is something the company should be proud of, and so it’s no surprise that insiders are holding on to a considerable chunk of shares. The growth and insider confidence is looked upon well and so it’s worthwhile to investigate further with a view to discern the stock’s true value.
Although Apple certainly looks good, it may appeal to more investors if insiders were buying up shares.
