Apple Doesn’t Need China

Summary:

  • If China were to vanish from Apple Inc.’s revenue stream, the stock price would only experience a modest drop of approximately 4%.
  • Based on my calculations, Apple’s current valuation appears fair, assuming that China does not enforce a nationwide ban on Apple products.
  • In a scenario where the highest estimates materialize, Apple could potentially yield an annual return of 10.27% from its current stock price of $175.74.

Apple Unveils New Products At Its Worldwide Developers Conference

Justin Sullivan

Thesis

Apple Inc. (NASDAQ:AAPL) stands as a globally renowned company, currently holding the title of the world’s most valuable, with Microsoft Corporation (MSFT) hot on its heels. Their innovations, including the iPhone and iPad, have left an

Sale of Consumer Electronics Apps (Services) Repairs (services) Banking (Services) Wearables, Homes and Accessories Total
2025 218,805.47 103,648.00 27,905.00 8,696.00 36,923.00 395,977.47
2026 223,772.35 118,573.31 28,909.58 9,556.90 38,975.92 419,788.07
2027 228,851.99 135,647.87 29,950.32 10,503.04 41,142.98 446,096.20
2028 234,046.93 155,181.16 31,028.54 11,542.84 43,430.53 475,229.99

Revenue Net Income Plus Taxes Plus D&A Plus Interest
2023 $383,330.00 $88,472.56 $101,684.48 $114,334.37 $118,083.33
2024 $406,060.00 $93,718.65 $107,713.98 $121,113.96 $125,085.22
2025 $417,340.47 $96,322.18 $110,706.30 $124,478.54 $128,560.13
2026 $441,151.07 $101,817.67 $117,022.45 $131,580.44 $135,894.89
2027 $467,459.20 $107,889.58 $124,001.11 $139,427.26 $143,999.01
2028 $496,592.99 $114,613.66 $131,729.32 $148,116.89 $152,973.57
^Final EBITA^

D&A Projection Interest Projection
2023 12,649.890 3,748.97
2024 13,399.980 3,971.27
2025 13,772.236 4,081.59
2026 14,557.985 4,314.46
2027 15,426.154 4,571.75
2028 16,387.569 4,856.68

Revenue Net Income Plus Taxes Plus D&A Plus Interest
2023 $383,330.00 $88,472.56 $101,684.48 $114,334.37 $118,083.33
2024 $406,060.00 $93,718.65 $107,713.98 $121,113.96 $125,085.22
2025 $398,052.62 $91,870.54 $105,589.89 $118,725.63 $122,618.58
2026 $422,243.57 $97,453.82 $112,006.93 $125,940.97 $130,070.51
2027 $447,402.63 $103,260.53 $118,680.78 $133,445.06 $137,820.66
2028 $475,341.37 $109,708.79 $126,091.98 $141,778.25 $146,427.08
^Final EBITA^

Advanced Economies Growth Emerging & Developing Growth Avg World GDP per Capita Growth % Apple Revenue Growth
2018 4.3% 5.8% 5.0% 15.9%
2019 3.1% 4.1% 3.6% -2.0%
2020 -3.5% -1.8% -2.6% 5.5%
2021 10.0% 10.9% 10.5% 33.3%
2022 9.4% 10.1% 9.8% 7.8%
2023 4.7% 6.8% 5.7% -2.6%
Correlation 50.5% 49.2% 49.9%
Covariance 0.3339% 0.3030% 0.3184%


Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in AAPL over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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