Apple: Why I'm Downgrading After A Solid Quarter (Downgrade)

Apple Inc. delivered a double beat in Q3, with strong growth in iPhone, Mac, and services, and record gross margins. Despite robust fundamentals and shareholder returns, AAPL's valuation is stretched, with a forward P/E of 38x versus a 5-year average of 29x. Shareholder yield remains low at ~2%, even with aggressive buybacks and dividends, limiting upside versus risk-free alternatives. I downgrade AAPL stock to Sell, citing an unattractive risk/reward profile and a thin margin of safety at current premium multiples. Apple Inc. (AAPL) went back to being the largest company in the world. It reached $5 trillion in market cap a few days ago. In my last article (on WWDC), I was more bullish on the This article was written by Kenio Fontes Equity Research Analyst with a broad career in the financial market, covered both Brazilian and global stocks. As a value investor, my analysis is primarily fundamental, focusing on identifying undervalued stocks with growth potential. Feel free to reach out for collaborations or to connect! Analyst’s Disclosure: I/we have a beneficial long position in the shares of AMZN, GOOGL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.