By: Catherine Yoshimoto, senior index product manager
For years, stock market scrutiny of Apple Inc. has focused on understanding what stage of the typical technology company life-cycle Apple has reached. In 2016, many market participants believed it was entering the mature stage of its business life-cycle, leaving its growth years behind. In 2017, however, Apple has proved the skeptics wrong, at least for now.
A company’s classification within the Russell Style and Stability Indexes often gives insight into its current status. From the Russell Style Indexes perspective, the 2016 Russell US Indexes reconstitution showed Apple moving from a 100% Growth company to a blend of both Growth and Value – indicating its possible shift into the last phase of its business life-cycle. In addition, 2016 saw a swing in the company’s Stability probability as it moved from primarily Defensive to mostly Dynamic.
This year ushered in a growth revival for Apple and at the 2017 Russell US Indexes reconstitution, it returned to its 100% Growth status, as the chart below illustrates.
In addition, Apple was split evenly between the Russell Defensive and Dynamic Indexes for the first time since the infancy of the iPhone in 2008, as we can see below. Apple has exhibited some defensive characteristics in varying degrees since 2009, highlighting on one hand the stability of its company fundamentals due perhaps to its maturity and on the other hand the volatility of its stock price.
Accordingly, within the combined Russell Style and Stability Indexes, we can see that Apple is also split 50/50 between the Russell 1000 Growth-Dynamic and Russell 1000 Growth-Defensive Indexes in 2017, while no longer figuring in the Value indexes.
So the results of the 2017 Russell US Indexes reconstitution with regards to Apple are clear: as 100% Growth and 50/50 Defensive and Dynamic, they indicate that Apple is not ready to stop growing just yet. Reason enough, one might think, for market participants to continue their intense scrutiny of the world’s largest company as it continues to evolve.
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