How Apple Stock Has Doubled Despite Falling iPhone Shipments

by Trefis Team
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Apple (NASDAQ:AAPL) stock has almost doubled over the last 4 years, rising from $110 in September 2015 to about $219 at the end of September 2019. The appreciation in the stock has come despite the fact that Apple’s flagship product – the iPhone – has seen sales shipments decline over the same period. In this analysis, we break down some of the key factors driving the price increase.

View our interactive dashboard analysis on How Apple Stock Has Doubled Over The Last 4 Years Despite Falling iPhone Shipments

We break down the change in Apple’s stock into 4 factors:

Apple’s Stock Price = (Revenue x Margins / No. of Shares) x P/E Multiple

Between FY’15 and FY’19:

  • Apple’s revenues are projected to increase by close to 10%
  • Margins are likely to decline by 7.7%, falling from 22.8% to 21.1%
  • P/E is projected to expand 57%
  • Share count will decline by about 20%

1. Apple’s Revenue Is Likely To Expand From $234 billion In FY’15 To About $256 Billion In FY’19

  • Apple’s revenues projected to grow from $234 billion in FY’15 to around $256 bill in FY’19

iPhone Sees Declines As Shipments Fall Sharply, Although ASP Increases Moderate Overall Decline

  • iPhone revenues are expected to decline to $142 billion in FY’19 from $155 billion in FY’15.
  • While iPhone shipments are projected to decline by 20% in the same period, ASPs are likely to rise ~15%

Services & Other Products Powering Overall Revenue Growth

  • Services revenues projected to grow from about $20 billion in FY’15 to over $42 billion in FY’19, driven by higher app store sales and subscriptions.

Other product sales are also projected to more than double between 2015 and 2019, driven by the Apple Watch and the Airpods wireless earphones.

2.Net Income Margins Have Declined

  • Apple’s net income is likely to see a very small increase between FY’15 and FY’19, driven by a higher revenue base, although margins are likely to dip.
  • The decline in margins is due to higher component prices, a lower mix of iPhone sales in total revenue, and foreign exchange related headwinds, although this has been partly offset by a lower U.S. corporate tax rate.

A Look At The Key Components Of Apple’s Margins

  • Gross Margins projected to decline from 40% in FY’15 to a little over 38% in 2018, driven by higher component costs and a lower mix of iPhone revenues.

  • R&D as % revenue rose from 3.5% to 5.1% between FY’15 and FY’18, likely driven by more long-term projects.

  • SG&A as % Revenue is likely to remain almost flat between FY’15 and FY’19.

  • The income tax rate has declined from 26% in FY’15 to around 18% in FY’18, driven by U.S. corporate tax reforms.

3. Apple’s EPS Has Expanded Despite Lower Net Income Growth, Driven By Lower Share Count


  • Apple’s EPS is projected to increase from $9.28 in FY’15 to $11.75 in FY’19.
  • The increase is driven primarily by a lower share count, following Apple’s sizable share repurchase program.

4. Apple’s P/E Ratio Has Expanded From 12x To 18x Between 2015 and 2019


  • Apple’s P/E ratio has expanded, likely due to the company’s increasing pivot to the services business – which likely has higher margins.
  • Tech stocks, in general, have also seen richer valuations, with the NASDAQ trading at 31x trailing earnings, versus 24x four years ago.



  • The appreciation in Apple’s stock price, despite declining iPhone shipments, indicates that the company is less dependent on the performance of the iconic product, as it focuses on selling more high-margin services and related products to its user base.


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