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It's been over 3 years since I've even thought about this stuff and I may be forgetting a lot but this is basically how I would approach analysis of AAPL... (apologies if this is all very basic but I think it will be helpful for this thread; it'll take me long enough to type it so have some respect)
First, I would want to get a grip on the industry itself. Who are the players and their relative positions in market capitalization and market share? What are the trends in the industry? What new product lines are in development and what are their sales projections? What inputs are required in this industry and how will changes in commodity prices or the structure of the supplier industry affect this industry? This is where you apply things like the Six Forces Model and SWOT Analysis to get a grip on AAPL's industry, where AAPL stands in it, the opportunities for AAPL, the opportunities for competitors, etc.
Now, AAPL is tricky because it's in the "Personal Computers" industry but that only touches on some of what AAPL does. Technology firms especially rarely fit into these neat industry categories with obvious competitors like the automobile industry does. Also, the Personal Computers industry isn't very meaningful since according to Yahoo, only AAPL and DELL are in the industry. Taking a broader view and looking at the Technology sector as a whole presents a host of new incongruities: it includes everything from Oracle to Vodafone. You have to use common sense knowing that it won't be perfect.
You would try to answer those industry outlook questions I asked earlier among others but you should also take a look at statements, market capitalization, P/E ratios, book value per share, etc. to get some understanding of what a firm in the industry should look like. Again, AAPL is a complicated case but if for example, I were looking at a simpler industry like the automobile industry, it would be useful to know how Ford's P/E ratio compares to the industry average or how debt-leveraged Ford is relative to other firms in the industry. You can also calculate expected stock prices using this comparison, which would be at the heart of this matter.
You're not just looking at how a firm compares to others. You're also looking at fundamentals; what is the fiscal health of the firm? How does it perform (earnings per share, cash flow to assets, etc.)? What is the level of the firm's activity and how well does it collect on receivables (asset turnover, collection ratio, etc.)? How is the firm financed (debt/equity ratio)? How much liquidity does the firm have (acid test, working capital, etc.)? Certain activities by the firm may provide you with some information (for example, debt signalling).
Now that's just the fundamentals. It would be helpful to also explore the technicals. That's where looking at things like put/call ratios will come into play.
First, I would want to get a grip on the industry itself. Who are the players and their relative positions in market capitalization and market share? What are the trends in the industry? What new product lines are in development and what are their sales projections? What inputs are required in this industry and how will changes in commodity prices or the structure of the supplier industry affect this industry? This is where you apply things like the Six Forces Model and SWOT Analysis to get a grip on AAPL's industry, where AAPL stands in it, the opportunities for AAPL, the opportunities for competitors, etc.
Now, AAPL is tricky because it's in the "Personal Computers" industry but that only touches on some of what AAPL does. Technology firms especially rarely fit into these neat industry categories with obvious competitors like the automobile industry does. Also, the Personal Computers industry isn't very meaningful since according to Yahoo, only AAPL and DELL are in the industry. Taking a broader view and looking at the Technology sector as a whole presents a host of new incongruities: it includes everything from Oracle to Vodafone. You have to use common sense knowing that it won't be perfect.
You would try to answer those industry outlook questions I asked earlier among others but you should also take a look at statements, market capitalization, P/E ratios, book value per share, etc. to get some understanding of what a firm in the industry should look like. Again, AAPL is a complicated case but if for example, I were looking at a simpler industry like the automobile industry, it would be useful to know how Ford's P/E ratio compares to the industry average or how debt-leveraged Ford is relative to other firms in the industry. You can also calculate expected stock prices using this comparison, which would be at the heart of this matter.
You're not just looking at how a firm compares to others. You're also looking at fundamentals; what is the fiscal health of the firm? How does it perform (earnings per share, cash flow to assets, etc.)? What is the level of the firm's activity and how well does it collect on receivables (asset turnover, collection ratio, etc.)? How is the firm financed (debt/equity ratio)? How much liquidity does the firm have (acid test, working capital, etc.)? Certain activities by the firm may provide you with some information (for example, debt signalling).
Now that's just the fundamentals. It would be helpful to also explore the technicals. That's where looking at things like put/call ratios will come into play.
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