Apple Stock Is Just Too Expensive

There's no question that (NASDAQ: AAPL) is a great company. Warren Buffett certainly agrees: Nearly half of Berkshire Hathaway's stock portfolio is tied up in shares of the company. The iPhone remains a dominant force in the smartphone market, and there's no sign that Apple's most important product is going to be disrupted in the near future.

Apple's report for the fiscal second quarter, which ended April 1, highlighted the company's industry-leading profitability. On $94.8 billion of revenue, Apple produced operating income of $28.4 billion. That's an operating margin of 30%. Apple is also a cash machine. Free cash flow totaled $55.9 billion in the first six months of the fiscal year.

But growth is becoming a problem. In recent years, the company has greatly expanded its services segment, adding new products like Apple TV+ to extract more ongoing revenue from its enormous install base. The effort has certainly paid off: Services revenue reached $20.9 billion in the second quarter alone, making it the second-largest segment behind the iPhone.

Continue reading

Source Fool.com