Peloton (NASDAQ: PTON), the most popular interactive fitness player for connected bikes, treadmills, and fitness content, is a fitness and spin course for people. But also the megacap computer giant Apple (NASDAQ: AAPL) wants to play a bigger role in the fitness sector with portable devices like the Apple Watch and digital services like Apple Fitness+.
So which stock is the best choice for investors? Peloton has a lower valuation (about seven times that of Apple, while the stock trades about 5.9 times more subsequent gains) and a higher long-term growth rate. You can see the increase. There is still something to compare, however.
Take a closer look at historical earnings growth, operating profit growth, and financial risk for a complete picture of the relative valuations of the two companies. Peloton Interactive and Apple Dashboards: Which Stock is Better in Home Fitness Trends? There are more details on this. Part of the analysis is summarized below.
1. Peloton sales growth is getting stronger
Peloton, which made $4 billion in sales in the last 12 months, is a baby compared to Apple, which made more than $347 billion in the last 12 months. However, Peloton’s growth was much stronger, with relatively high demand for fitness equipment and investments to strengthen it, generating sales of around $900 million.
That’s $37 million. Supply chain. In comparison, Apple’s revenue grew 36% due to increased demand for computer products, digital services, and wearables. Peloton’s historical average growth rate is also high and consistent. For example, Peloton has almost doubled its sales annually for the last three years, while Apple has increased its sales by a total of 6% over the last three fiscal years.
Peloton’s revenue is expected to grow 30% year-over-year to $5.2 billion by 2022. Apple’s revenue growth is set to accelerate in 2009, however, and the iPhone will grow about 33% to around $366 billion due to massive adoption of 5G. . After the Covid-19 pandemic, the demand for computer products such as the Mac and iPad has increased. However, in the medium to long term, Peloton’s average growth rate is expected to remain higher than Apple’s.
2. Apple has big margins, but Peloton has room for improvement
Although Peloton has a relatively strong gross profit margin of 36%, its operating profit margin is around -5% year over year and is still in the red zone. Apple, meanwhile, has the highest profit margins in the consumer electronics industry due to premium products and strong pricing.
The operating margin for the last 12 months was around 29% and gross margin was around 41%. Currently, both companies have made several strides in increasing margins over the past few years. Apple increased its margin from around 26.7% in 2018 to around 28.8% in 2021, but Peloton’s operating margin rose from about -11% to around -4.6%.
Looking ahead, Peloton could come under a bit of pressure in the short term due to higher marketing costs and lower selling prices for some products due to recent price cuts. Apple could also see some pressure due to the ongoing shortage of semiconductors. However, we believe that Peloton’s operating margin will continue to grow in the long term as fixed costs are better absorbed as sales increase.
Everything is clean
Apple’s story is simple. Customers buy iDevices, become obsessed with Apple’s ecosystem of devices and services, and return to the company to find more to power automated ATMs. Apple’s stock has been relatively expensive lately, and its P/S multiple has increased from 2.5x in 2018 to about 7x now, but the company’s business model is constant (though it varies slightly).
It promises investors steady growth and returns (even if there are) in the form of purchases and dividends. Peloton is considering a similar business model. This is done to sell expensive but desirable fitness equipment and to get customers to pay a monthly fee for a subscription service.
However, Peloton is the better growth option as it has a lower sales ratio (5.9x vs. 7x) than Apple, has seen strong sales growth recently, and improves profit margins. I think there is. Additionally, Peloton’s share price has fallen by about -42% since mid-January, and while Apple’s share price has been up about 15% annually, this could be a good entry point for investors. I’ve already.
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