As an Apple shareholder, you are entitled to a portion of the company's earnings. Apple currently has a price-to-earnings ratio of 12.56, meaning it costs $12.56 to buy $1 of the company's annual earnings. This can be used to compare Apple's stock to other investments and derive its earnings yield of 8%. While individual shareholders do not receive all of Apple's earnings directly, they do receive quarterly dividend payments which currently yield 1.8% annually. Analysts expect Apple's earnings to continue growing in the current and next fiscal years.

1. Apple
An Owner's Manual for Investors

2. you're entitled to a share of its earnings.
As an owner of Apple's stock

3. NOT TO SCALE
obviously
$53.4
Billion
Apple's
12-Month
Earnings
Apple's
Earnings
per share
$9.20

4. If you divide Apple's share price by
its earnings per share (EPS), you get
its price-to-earnings ratio.

5. P/E
Ratio
=
Share Price
EPS
12.56=
$115.48
$9.20
=
This is how much it costs to buy $1
of Apple's annual earnings.

6. A higher P/E ratio implies a lower
potential return.

7. 1
10
100
1,000
100 Biggest S&P Companies
P/ERatio
Most companies have P/E ratios
between 12 and 30.
What Is a Typical Stock's P/E Ratio?

8. You can also use Apple's P/E ratio to
derive its earnings yield.

9. 1
12.56 8.0%
Apple's
Earnings
Yield
1
P/E Ratio
= ==

10. This helps you compare a stock
to other types of investments,
such as bonds and real estate.

11. 7.96%
6.63%
4.33%
2.90%
2.45%2.21%
Apple's
Earnings
Yield
Class A
Office
Building
Cap Rate
S&P 500
Earnings
Yield
10-Year
AAA Corp.
Bonds
5-Year
CDs
10-Year
Treasuries
Average Rates of Return

12. Of course, if you own one share of
Apple stock, you don't get a check
each year for its EPS.

13. You receive quarterly dividends
instead, which typically account
for only a portion of total earnings.

14. 22%
Apple's Payout Ratio
The payout ratio is the percentage of earnings
paid as dividends. Anywhere from 30% to
70% is normal.

15. 1.80%Apple's Dividend Yield

16. Apple's
Dividend
Yield
=
Dividend
per Share
Share
Price
=
$2.08
$115.48
= 1.80%

17. You can then use this to compare
stocks based on their income-
generating potential.

18. 1.80%
3.71%
3.31%
2.75%
1.67%
0.71%
Apple Exxon Wal-Mart Wells
Fargo
Comcast Visa
Representative Dividend Yields

19. Apple also buys back its own stock.

20. This reduces its share count, which
increases the ownership interest
of each remaining share.

21. $34.8
Billion
-4.8%
Apple's
Buybacks
(TTM)
Change in
Apple's Share
Count (TTM)

22. Apple's stock?
So, what does the future hold for

23. Apple
2,644%
S&P 500
116%
-500%
0%
500%
1,000%
1,500%
2,000%
2,500%
3,000%
Today20132011200920072005
If the Past Is Prologue...
Total return since Jan. 1, 2005

24. Apple's earnings to grow.
While it's impossible to predict the
future with precision, analysts expect

25. $9.87
$10.63
Current Fiscal Year Next Fiscal Year
Average Earnings per Share Estimate Among Wall
Street Analysts
Divining Apple's Future

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