Main Highlights
- “Big picture”: strong, rising gross margins & free-cash yield
- Liquidity tightening vs. leverage strategy
- Cash ROE/CROA as proof of financial flexibility
- Volatility in net cash flows—contextualize strategic M&A and buybacks
- Apple remains hugely profitable and cash-generative, but with higher leverage and thinner liquidity buffers—a balanced “bull + risk” narrative.
Cash Return on Equity (Cash ROE) Recent moves 2022: 241% → 2023: 178% → 2024: 208% After peaking in 2022, Cash ROE dipped in ’23 but rebounded strongly in ’24. Why it matters? Shows how effectively Apple turns equity into cash flows—still well above historical averages (2014-19 range: 48–77%) Highlight: the 2024 rebound to 208% underscores Apple’s continuing cash-generative power despite heavier leverage.
Liquidity Trends Downward drift in all three: from 1.5× current in 2019 to ~0.9× in 2024 Cash ratio halved since 2019 (0.95→0.37) Highlight: Liquidity buffers have systematically tightened—worth discussing implications for short-term stress scenarios.
Leverage Dynamics Apple has leaned into debt (for share buybacks/dividends), boosting financial leverage—discuss the trade-off between lower WACC vs. higher coverage risk. Debt / Equity nearly doubled since 2019, peaking in 2022 Equity ratio down from 56% to ~37%, meaning ~63% of assets are now debt-funded
Operational Efficiency Apple’s scale still drives top‐quartile turnover ratios, though lean inventory models are loosening a bit. High turnover (Asset & Fixed-Asset): peaked 2021–22, slight normalization in 2023–24 Inventory days up (rearward): from ~1.6 days in 2015 to ~3.2 days in 2024
Margin Stability Continuous margin expansion on core products/services, driven by higher-margin Services and tighter cost control. Gross margin climbed steadily, hitting 46% in 2024 Operating margin recovered to 32% after trough in 2020 Net margin very stable ~24–26%
EPS Growth EPS stability at post-pandemic highs underscores return-of-capital strategy and resilient profitability. EPS rose from $3.31 (2020) → $5.67 (2021) → plateauing ~$6.1 in 2022–24 Share buybacks support per-share metrics despite slowing absolute earnings growth
Cash Flow Ratios Apple’s business generates free cash at a consistently high rate, enabling dividend hikes + buybacks while funding capex. Free cash flow steady ~32–34% of revenue—industry-leading CROA climbed into mid-30s in 2022, solid ~32% in 2024
Net Cash Flow Volatility Seasonal and strategic cash uses cause net flow swings, emphasizing the strong underlying operating cash generation that cushions these moves. 2024: (-$794 M) vs. large inflows in ’23 (+$5.8 B) and outflows in ’22 (-$10.9 B) Driven by swings in Investing (acquisitions, capex) and Financing (debt issuance/repurchases)
AI in in buy/selling common shares of stock Fintech has the possibility to aid investor make data driven decisions, but not replace an investor entirely yet. Accourding to the CFA Institute Research Foundation, "Technical analysis provides a framework for informing investment management decisions by applying a supply and demand methodology to market prices. Underlying principles of the study of technical analysis are derived from the assumption that changes in the supply and demand of traded securities affect their current market prices." -Scott, G., Carr, M., & Cremonie, M. (2016). Technical analysis: Modern perspectives. CFA Institute Research Foundation. https://rpc.cfainstitute.org/research/foundation/2017/technical-analysis
Portfolio managers can easily refresh charts to show trading volume, moving averages, stock price volitility, and relative strength charts, trading momentum, and stop-losses. These data points are offered under certain subscriptions, yet through Python, any type of investor can replicate these important signals for free of charge, as like the screenshots below.
Examples of Charts that can be created.
