There is no denying that Apple (NASDAQ:AAPL) is an incredible company that runs an incredible business. Although I'm not buying shares at these levels, I'm still amazed by what this company has achieved. Although Apple's record profit last quarter was extremely impressive, it's even more impressive when compared against Samsung Electronics' (OTC:SSNLF) annual operating profit last year.
Apple beats up Samsung's operating profit
According to Apple's most recent earnings release, the company generated $24.246 billion in operating income last quarter. Samsung, on the other hand, generated 25 trillion Korean won in operating profit last year, translating to about $22.5 billion at current exchange rates.
That's right: Apple generated more operating profit in a quarter than Samsung did in a year.
This figure would be impressive if Samsung were "just" a direct competitor to Apple in the mobile device market. However, Samsung is also major player in semiconductors, consumer electronics, and display technology, and has market-leading positions in just about all those segments, to boot.
Additionally, many of the other segments that Samsung competes in feed directly into the company's mobile device business. This makes Apple's operating profit leadership over Samsung that much more impressive. Put another way, Apple's operating margins are significantly higher (30% compared to 13%).
Can Apple extend its edge over Samsung?
Samsung's operating profit fell from 36 trillion Korean won in 2013 to 25 trillion Korean won last year, a staggering 30.56% dive. This was due to the implosion of the profitability of the company's mobile device business, offset by continued growth in its semiconductor businesses.
On the other hand, Apple's operating income last quarter jumped 38.8% year over year, due to the very strong performance of its iPhone line.
Samsung's operating profit is expected to rise slightly in 2015, to 25.140 trillion Korean won ($22.7 billion at current exchange rates). Meanwhile. Apple's operating income is projected to spike substantially, to about $66.3 billion in 2015, from $52.5 billion in 2014.
It seems, at least if analyst consensus is correct, Apple should widen its operating profit lead this year.
Apple is expected to grow this already huge profit base
While these analyst estimates make a lot of sense based on what we know today, they are hardly set in stone. Either company could do significantly better or worse than what these estimates suggest, and as both companies report their results, analysts will refine their estimates.
Nevertheless, what Apple seems to have achieved is nothing short of breathtaking. According to analyst estimates, Apple will grow its operating profit from $66.27 billion in 2015 to $68.462 billion in 2016, and then to $71.67 billion in 2017. This is not large growth on a percentage basis, but would still be impressive from a raw operating profit dollar growth perspective given Apple's enormous profit base.
It will be interesting to see if Apple can actually hit (or potentially exceed) these numbers over the coming years.