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One thing which is not appreciated enough about Apple is how magnificent its Return on Capital is. Its net profit margin hover over 20% and compared to another
by gordon_freeman 6y ago
One thing which is not appreciated enough about Apple is how magnificent its Return on Capital is. Its net profit margin hover over 20% and compared to another company Amazon which also has posted over a $100 billion revenue in a single quarter but Amazon's net profit margin is around 5%. I would say Apple is in a league of its own!
- bigtones 6y agoNot quite a league of their own but a short list of companies for sure - Microsoft posted revenue of $43B this quarter (not as high as Apples $110B Q) but with a 32% net profit margin.
- pavlov 6y agoFacebook's margin is even better, 46% on Q4 revenue of $28B. Of course Microsoft's income is more diversified while FB's revenue is almost entirely ads (other revenue was $885M, mostly from Oculus Quest 2).
- ttul 6y agoThis is how they can afford to pay engineers virtually whatever it takes.
- encoderer 6y agoThey also bought-back several hundred million shares. Most tech companies are slowly diluting share holders with their quarterly RSUs, while Apple is continually shrinking their overall outstanding share count. The main question is, do you believe they can keep it up, and I for one do. Their eco-system gets stronger every year.
- bigtones 6y agoI think they can keep it up - their services revenue growth has been pretty spectacular over the last few quarters, and with more people at home due to COVID their new Apple Fitness thing is going to take off.
- gordon_freeman 6y agoAlso to keep in mind is that their profit margin on services is higher compared to their devices. Hence I'm assuming the upward growth of its net profit margin in coming years along with increasing revenue. Lots of upside for AAPL imo.
- coldtea 6y ago>The main question is, do you believe they can keep it up, and I for one do. The beauty of buying back shares is that you don't need to "keep it up" as much, because you're not beholden to shareholders as much...
- jerry80 6y agoWhy do you say they're less beholden to shareholders? Regardless of how much they buy back, shareholders still own 100% of the company.
- tinus_hn 6y agoIs that actually true? It sounds like a loophole would be possible: create a shell company that buys the shares instead so you can control the votes that belong to these shares.
- kugutsumen 6y agoShares that are bought back by a company are destroyed. Thus, increasing the value of the remaining shares.
- thisarticle 6y agoI’d be interested in the mechanics of how that works. I understand buying and selling of shares, but do you just got it the exchange and tell them you want the shares destroyed or?
- encoderer 6y agoI shit you not somebody writes "canceled" on the paper shares and moves them to a separate holding area.
- tinus_hn 6y agoBut what if they are bought by another company? That the original company controls?