Apple Inc. designs and sells consumer electronics, software and services and presents a cash-rich, high‑margin franchise with strong per‑share growth characteristics and modest leverage.
The company exhibits pronounced profitability and cash generation: trailing gross margin is 47.3%, operating margin 40.9% and net margin 27.0% in the latest quarters (Profit Margin Trends), and trailing twelve‑month operating cash flow of $135.47B exceeds TTM net income of $117.78B, with a free cash flow margin of 25.98% and a cash conversion ratio above 1.1, underscoring high earnings quality (Earnings Quality Analysis; Revenue & Net Income).
Apple’s multi‑year growth profile is also notable — five‑year EPS CAGR is 13.0% and five‑year revenue‑per‑share CAGR is 6.77%, while the most recent one‑year revenue‑per‑share growth accelerated to 12.8% and diluted EPS growth was 22.5% in the latest observed periods (Revenue & Net Income; EPS Diluted & Revenue per Share; Revenue & EPS Growth).
Areas of concern include near‑term liquidity and signs of moderation in returns: the current ratio is below 1.0 at 0.9737, indicating tighter short‑term liquidity than peers, and trailing ROE growth is negative (−7.28%) even though ROE itself remains extremely elevated at 133.5% — a pullback from earlier peaks (Return on Equity). Capital allocation flows also merit attention: financing cash flow remains a consistent net outflow at −$120.97B TTM and investing cash flow contracted sharply to $0.517B most recently, signaling shifts in deployment of cash that could affect reinvestment or shareholder return patterns (Strategic Capital Allocation).
Key fundamentals to monitor going forward are operating cash flow and free cash flow margin (currently $135.47B TTM and 25.98%), revenue‑per‑share and EPS growth trends (5‑yr EPS CAGR 13.0%, recent RPS growth 12.8%), the current ratio (0.9737) for liquidity, the trajectory of ROE (133.5% with recent negative growth), and the trailing PE which sits near 34.7x after recent quarterly fluctuations (Earnings Quality Analysis; EPS Diluted & Revenue per Share; Return on Equity; Price-to-Earnings (PE) Ratio Trend).
The foundation of business quality and long-term value creation
Apple Inc.'s revenue data show a clear seasonal pattern with recurring December-quarter peaks. Recent sequentials show revenue rising to $143.76B in the period ending , then falling to $111.18B in the period ending . Mid-year quarters in 2024–2025 sit notably lower (generally in the $85B–$102B range), while the December quarters in 2023–2025 climbed from $119.58B to $124.30B and then to $143.76B, marking the most pronounced upward inflection in the dataset.
Net income follows a similar seasonal profile with elevated profits in December quarters. Net income increased to $42.10B in the period ending from $27.47B in the prior quarter () and from mid-year levels around $23B–$24B earlier in 2025. Prior December quarters also show higher net income (e.g., $36.33B in 2024-12-28 and $33.92B in 2023-12-30). The most recent revenue observation was $111.18B (period ending ). The most recent net income observation was $42.10B (period ending ).
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Over the period Mar 2025 to Mar 2026, Apple Inc generates $451.44B in revenue. The waterfall below shows how revenue flows through various expense categories.
Period Information
Report Type: Annual (10-K)
Period: Mar 2025 to Mar 2026
Revenue composition by disclosure category for the latest period
The Company’s product lineup includes the iPhone smartphone line, Mac personal computers comprising laptops and desktops, iPad multipurpose tablets, and Wearables, Home and Accessories such as smartwatches, wireless headphones, spatial computers, media streaming and gaming devices, smart speakers, and Apple-branded and third-party accessories. The Company also resells third-party products.
The services segment includes Advertising through third‑party licensing and Apple’s advertising platforms; AppleCare—fee‑based support offering priority technical support, repair and replacement via the global Apple authorized service network, often with additional coverage for accidental damage or theft and loss, dependent on country and product; Cloud Services encompassing cloud storage and content synchronization across Apple devices and Windows PCs; Digital Content platforms like the App Store for application discovery and downloads, along with subscription services such as Apple Arcade, Apple Fitness+, Apple Music, Apple News+, and Apple TV+ with original content and live sports; and Payment Services including the Apple Card co‑branded credit card and Apple Pay cashless payment service.
Primary customer groups explicitly identified are consumers, small and mid‑sized businesses, education, and enterprise and government markets.
The Company’s business is primarily organized on a geographic basis, reporting through segments such as Americas (North and South America), Europe (European countries, India, Middle East, and Africa), Greater China (mainland China, Hong Kong, Taiwan), Japan, and Rest of Asia Pacific (Australia, New Zealand, and other Asian countries).
The Company operates through direct channels—retail stores, online stores, and its direct sales force for product and third-party product resale—and indirect channels—third-party cellular network carriers and resellers for product and certain service sales. The Company reports net sales through both distribution methods.
Services like AppleCare are fee‑based with subscription characteristics. Several digital content services, such as Apple Arcade and Apple Music, operate on a subscription model. The Company also maintains platforms, including the App Store, that facilitate application and content downloads. Other services, including Cloud Services, Advertising, and Payment Services, are described in functional terms, but their revenue contractual structures are not explicitly specified.
Key risks involve supply concentration, as some components are sourced from limited suppliers or depend on custom components available from a single source. Suppliers may face capacity or yield issues, or cease operations, affecting component availability. Trade and materials risk stems from restrictions on international trade that can increase costs or limit raw material supply. Dependency on third-party intellectual property and licensing also poses risks, as the Company must secure and renew licenses that may not be readily obtainable. The Company’s market position relies heavily on innovative product and service introduction, with competitive factors including price, features, design, technology, ecosystem strength, marketing, and support. Additionally, seasonality and timing of new product launches significantly influence sales, costs, and inventory levels.
Analyzing long-term margin stability and competitive positioning
Apple Inc.'s margin series shows a clear inflection in mid 2024 followed by a sustained recovery through 2025. Gross and operating margins dropped sharply into the high 20s and low 20s in Q1 – Q2 2024 (gross ~28.1–28.6%, operating ~21.4–22.0%), then rebounded by late 2024 into the mid 40s for gross margin and around 40% for operating margin. Net profit margin has been less volatile, generally in the mid 20s across the period, with smaller fluctuations relative to gross and operating margins.
Focusing on the most recent quarters, gross margin has trended modestly upward through 2025 (46.6%, 46.7%, 46.9%, 47.3%), operating margin has similarly inched higher (40.0%, 40.1%, 40.3%, 40.9%), and net profit margin rose from the mid 20s into the high 20s in the latest quarters (24.3%, 24.3%, 26.9%, 27.0%). The most recent gross margin was 47.3%, the most recent operating margin was 40.9%, and the most recent net profit margin was 27.0%.
Understanding Profit Margins
Between Mar 2025 and Mar 2026, Apple Inc converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
Apple Inc.'s trailing twelve-month operating cash flow and net income have generally trended upward over the displayed period, with operating cash flow frequently exceeding net income.
In the most recent quarters, both metrics rose: operating cash flow moved from $111.48B at 2025-09-27 to $135.47B at 2025-12-27, while net income rose from $112.01B to $117.78B over the same interval. A short-lived inflection occurred at 2025-09-27 when net income ($112.01B) slightly exceeded operating cash flow ($111.48B) by roughly $0.53B, but the latest TTM shows operating cash flow surpassing net income by about $17.69B.
Over the multi-year series, both operating cash flow and net income have increased from earlier levels (for example, operating cash flow around $75–$80B and net income around $55–$60B in 2018) to the current higher ranges, with operating cash flow generally tracking at or above net income.
Trailing 12-month Operating Cash Flow: $135.47B
Trailing 12-month Net Income: $117.78B
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
Trailing Twelve Months
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
In the most recent year, Apple Inc.'s trailing‑12‑month ROE has remained extremely elevated but showed some moderation. After readings around 150–152% in mid‑2025 and 151.9% in the 2025‑09 quarter, ROE declined to 133.5% in the latest quarter (period end 2025‑12‑27), indicating a pullback from the mid‑2025 cluster of higher values.
Over the multi‑year series, Apple Inc.'s ROE rose from the roughly 30–60% range in 2015–2019 into consistent triple‑digit territory beginning in 2021 (110.3% in 2021‑03), peaking at 197.0% in 2022‑09, and then settling into a band generally between about 130% and 165% through 2024–2025. The most recent trailing twelve‑month Return on Equity for Apple Inc. was 133.5% as of period end 2025‑12‑27.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
Apple Inc.'s operating cash flow (TTM) rose noticeably in the most recent period, increasing to $135.47B as of 2025-12-27 after a relatively stable run around $108B–$111B across the prior year (for example $111.48B on 2025-09-27, $108.56B on 2025-06-28, $109.56B on 2025-03-29, $108.29B on 2024-12-28). The most recent quarter therefore represents the largest upward inflection in operating cash flow within the shown history.
Investing cash flow (TTM) declined sharply in the latest period to $517.0M (2025-12-27), down from $15.20B one quarter earlier and $19.23B two quarters earlier, reversing a short run of larger positive investing cash flows.
Financing cash flow (TTM) has been a consistent net outflow across recent quarters, with the latest value at -$120.97B (2025-12-27), remaining in a range near -$118B to -$131B over the past year.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Trailing Twelve Months
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
In the most recent year Apple Inc.'s trailing twelve-month PE has moved within a fairly narrow band after a late-2024 peak. The ratio peaked at 39.2x for the quarter ending , then declined to 34.1x () and to a recent trough of 30.9x () before rebounding to 33.9x () and 34.7x (). The last three quarters show a sequential recovery from the mid-30s low in mid-2025 back toward the mid-30s range by year-end 2025.
Over the multi-year series the PE has risen from low single digits and teens in the 2015–2018 period into the 20s and 30s from 2019 onward, with a notable inflection between (25.3x) and (39.2x). The most recent price-to-earnings (PE) ratio was 34.7x.
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.