Investing $10,000 in Apple back in August 2016 would have turned into approximately $126,000 today, provided that the dividends were reinvested. Such an investment would have grown by about 12.6 times over the past decade, illustrating Apple’s impressive long-term performance. The stock’s price appreciation significantly contributed to these gains. Adjusted for stock splits, Apple’s share price increased from around $27 in 2016 to approximately $311 today. Even without reinvesting dividends, the initial $10,000 investment would have grown to about $115,000.
Apple’s financial performance has seen considerable improvement over the years. The company’s earnings per share have climbed to roughly $8.72, up from about one-quarter of that figure a decade ago. This growth has been aided by Apple’s substantial stock buybacks, which have reduced the number of shares outstanding and boosted earnings per share. Additionally, Apple’s valuation has seen significant changes. In 2016, investors valued the company at about 13 times its earnings, whereas today it is valued at around 36 times earnings. This combination of enhanced earnings and a higher valuation multiple has been crucial in driving the stock’s substantial gains.
Looking ahead, achieving similar performance over the next decade could pose challenges. Apple’s current valuation limits the potential for further major expansion in its price-to-earnings ratio. Hence, future returns are expected to hinge more on sustained growth in earnings. The company’s potential for continued growth could be supported by advancements in artificial intelligence, the introduction of new products, and leveraging its extensive installed user base. However, given its current size, Apple will need to achieve significantly larger increases in revenue and profits to maintain rapid earnings growth.
For investors focused on the long term, Apple’s performance over the last decade underscores the effectiveness of combining business growth, share repurchases, and valuation expansion. Moving forward, the company’s future returns will likely depend more heavily on the pace at which it can grow its profits.