Apple is viewed as a company that is confident with their capability to grow immensely in the tech industry for years to come. Investors are not so keen with that idea and their take is contradicting to Apple’s expectations.
The stock has surged 33% this year which adds $200 billion in value, but despite the hike in the share price, the recent run has increased Apple’s PE ratio to about 17.5, significantly below the S&P average of well over
Warren Buffett, Chief Executive Officer and Chairman of Berkshire Hathaway, explains an ideal wherein a low multiple dictates that investors aren’t anticipating their gains to flow from rapidly rising profits, motivated by reinvesting earnings at high rates of return.
From their perspective, the best choice is to pay out everything Apple earns as it seems to be viewed by investors as a mature slowpoke that can’t find much to earn a profit when invested in.
This doesn’t translate as Apple being a poor buy. It’s appealing mainly because it’s cheap. If Apple displays zero growth in real term, meaning its earnings simply wax with inflation at 2% a year and it continues on paying all profits in dividends, also buybacks, investors will eventually earn annual gains of around 8% a year. The downside is the danger of Apple not being able to raise its already huge profits at all.
Apple’s iPhone X Advanced Facial-scanning Technology
Apple’s iPhone X facial-scanning has been argued to be the one feature which puts it far ahead of its Android-based competitors.
.Ming-Chi Kuo, KGI Securities analyst, explained in a research note on Monday that investors should be aware that iPhone X’s Face ID, puts it one-and-a-half to two-and-a-half years advanced within its rivalry with Android-based alternatives like Samsung Galaxy S8.
Kuo believes Apple’s TrueDepth technology as reported earlier on the note from Apple-tracking site 9to5Mac. The said technology uses face-scanning to determine whether to grant access to a particular phone. It’s recognized as a major technical leap forward which he stated that Android competitors can’t easily replicate because of its ability to evaluate a person’s facial features in 3D where most face scanners can only do so in 2D.
Apple made a comparison with Face ID to similar technology used in rival devices in its iPhone press event last month. It’s said to be more secure than the previous TouchID fingerprint sensor in the iPhone 8 and Android-based facial-scanning alternatives.
In order to rightly compete, rivals will either need to create similar technology or acquire smaller firms focused on it.
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