Profitability and Services Grow Apple Valuation
Not only is Apple a very strong brand, but “is also is extremely profitable,” said John Zolidis, president of Quo Vadis Capital. He added:
AAPL’s operating margin was 27% in its most recent year. It generates very large amounts of excess cash. Over the past five years AAPL has generated an average of $59 billion per year. The company had over $100 billion in cash on the balance sheet at the end of the most recent quarter.
Furthermore, Apple’s much-discussed shift to services is also going to help it hit that $2 trillion market cap. Jesse Cohen, an analyst at financial markets platform Investing.com said:
Accelerating growth in its burgeoning services business, combined with booming demand for its wearable devices, led by its popular AirPods, underline the case for Apple to hit the $2T market cap level by 2024. AR glasses could be the company’s next big hardware product.
Leon Wilfan of Lahardan Financial was also bullish on Apple because of the growth in services. He said the services business “has massive potential.” Mr. Wilfan also noted that Apple customers use their devices a lot more than Android users. “When you have such a loyal and active customer base, all you need to do is start offering them services…precisely what Apple has been doing, If you look at Apple’s revenues, services are up by about 25% YoY, and now represent 20% of the total,” he said.