Do current fundamentals justify AAPL’s valuation? | Utradea

5 min readApr 7, 2022


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AAPL is undervalued and a solid investment. I’m going to jump into why I believe this to be the case. We are going to look at AAPL’s current valuation, recent earnings, and 7 key financial ratios. This is a fairly long analysis but if you’re thinking of investing in AAPL then you should have a decent understanding of why you decided to make this investment. Anyway, enough with the intro, let’s jump into the analysis.

AAPL Summary:

If you’re not familiar with AAPL then here is a quick summary, feel free to jump past this part.

“Apple Inc. designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. It also sells various related services.”

AAPL Stock Recent Volume Comparison

I’m usually more of a fundamental investor but I also think there are some technical indicators that help provide additional; content when making an investment, which is why we will look at recent volume.

Comparing AAPL’s most recent volume to their average monthly volume can help us derive some valuable insights. Firstly, AAPL’s average volume over the past 2 trading days is sitting around 79.93M, which is lower than their average monthly trading volume of 94.25M.

AAPL’s low relative volume suggests that price movements are not expected to be as variable, which is unattractive for traders. This does not mean prices will not go up or down, but the movements/trends are likely to be less significant.)

AAPL Valuation and Stock Rating

Understanding the valuation of a stock is a useful check to see if the investment fundamentals are sound. I pulled the valuation and stock rating for a quick view to see if AAPL is considered undervalued or overvalued.

Analysts of AAPL have given an overall rating of 5, on a rating scale between 1 and 5, with 1 being the worst and 5 being the best. This overall rating consists of 3 different ratings, PE, ROE and DCF which I’ll get into below.

PE Rating: Currently, analysts have given AAPL a PE rating of 5. This is the highest ranking and implies that the AAPL stock is currently undervalued. The PE rating factors in the trailing, current, and future PE Ratio of the AAPL stock. In the case of AAPL, analysts think that AAPL is undervalued given their P/E ratios, relative to the average P/E ratio of their peers.

ROE Rating: Currently, AAPL has been given an ROE rating of 5 by analysts. This is the highest score one can achieve via an ROE rating. This indicates that AAPL’s ROE is not only healthy, but better than their peers. AAPL’s ROE score of 5 implies that they are currently profitable and are generating these profits in an efficient manner. A high rating such as AAPL’s could also indicate that their management team is better at managing inventory, cash flows, and business operations better than the management teams of AAPL’s peers.

DCF Rating: We have saved the best (and most influential) rating for last. AAPL has been given a score of 5 based on the quality of their DCF model (and projections). The DCF model is very commonly used by investors to value securities and is the de facto measurement of a stocks value. As a result of this, a high level of importance is placed on the company’s DCF models. With that being said, AAPL’s score of 5 is very good, implying the outlook for AAPL is very positive, and their stock is currently undervalued.

Based on these metrics we can see that AAPL seems to be undervalued and a solid investment. Considering these core metrics look good, I would be likely to take a position in AAPL. That being said, I want to look at some other metrics and factors.

Recent and Upcoming AAPL Earnings

Some people like to “play” earnings, but I tend to look at historical and upcoming AAPL earnings to analyze or re-analyze my investment. Typically, a beat will cause the price to jump, and a miss will lead to a drop, but we’ve seen a few cases recently where it’s been the opposite. Either way, let’s look at AAPL

Historically, AAPL has beat their earnings 95% of the time. This track record is fantastic and allows us to assume that they will continue to beat estimates. Furthermore, their average earnings beat is 10.98%, which is a significant amount.

AAPL’s most recent earnings release came on Jan 26th, 2022, in which AAPL reported an EPS of $2.1, which was 11.11% better than their EPS estimate of $1.89.

Using this information we can expect AAPL to beat their next earnings estimate of 1.43 by 10.98%, on Apr 27th, 2022. If this were the case AAPL’s EPS would be 1.59 which is 13.57% higher than their Q2 2021 EPS of $1.40. This signifies that AAPL is on the right path, and is continuing to generate more revenues, and become more profitable.

AAPL Stock Key Ratio Analysis

There are 7 main financial ratios that we are going to look at today. These ratios can help us to get a general idea of the financial health of the AAPL stock before we choose to enter into (or add to) a position. These ratios can help us to understand the current state of Apple Inc.’s business, as well as what their future might look like.

Why I Think AAPL is Undervalued/Overvalued

Overall, I think that the AAPL stock is undervalued. This is due to AAPL overall stock grade being ranked a 5, their 95% track record of beating earnings, and the fact that all 7 of their key ratios are good (if not great). I think that all of these factors on their own are amazing, however when you look at them together it creates the perfect storm. The only downside is their volume seems to be a bit low right now, however, if it starts to pick up, we might start to see some upside in AAPL

Thanks for taking the time to read my analysis, please follow me for the latest investment insights and leave a comment if you have any questions or disagree with my thoughts — always open to a good discussion!

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