Since September 2024, Apple has been in a holding pattern, posting a small loss of 2.7% while floating around $220.22.
Given the underwhelming price action, is now a good time to buy AAPL? Or should investors expect a bumpy road ahead? Find out in our full research report, it’s free.
Why Does AAPL Stock Spark Debate?
Creator of the iPhone and shepherd of the App Store, Apple (NASDAQ: AAPL) is a legendary developer of consumer electronics and software.
Two Things to Like:
1. Excellent Free Cash Flow Margin Boosts Reinvestment Potential
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills or invest for the future.
Apple has shown terrific cash profitability, enabling it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company’s free cash flow margin was among the best in the consumer discretionary sector, averaging 26.3% over the last five years.
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. 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:
Lackluster 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 1.1% over the last two years was below its five-year trend. 
Final Judgment
Apple’s positive characteristics outweigh the negatives, but at $220.22 per share (or 29.1× forward price-to-earnings), is now the time to initiate a position? See for yourself in our full research report, it’s free.
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