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AAPL – Apple Connects Through Economic Jitters

Written by Dan Gallagher on May 4, 2023. Posted in AAPL, Stock Report.

Apple Inc.
managed to sell a decent number of iPhones this winter. That was hardly a foregone conclusion.

Revenue from the popular smartphone family rose 2% year over year to $51.3 billion for Apple’s fiscal second quarter, which the company reported on Thursday—a pleasant surprise for investors, as Wall Street had been predicting a 4% decline. And because the iPhone still drives more than half of Apple’s top line, the upside was enough to bring the company’s total revenue to $94.8 billion, which was about 2% ahead of analysts’ estimates.

Still, Apple is far too big to escape the weight of the slowing global economy. iPad and Mac revenue both experienced double-digit declines, while wearables revenue also slipped a bit during the March quarter. Service revenue rose 5% year over year to $20.9 billion, which was in line with Wall Street’s expectations but also the third consecutive quarter of mid-single-digit growth for what is now Apple’s second-largest segment. Hence, Apple’s total revenue fell 3% year over year after a 5% decline in the December period—the first time in four years that the company has posted two straight quarters of declines.

The company said on its conference call that it expects a similar revenue performance in the June quarter, implying a miss relative to the slight year-over-year revenue gain Wall Street had been expecting for the period. Still, Apple’s shares rose more than 2% in after-hours trading following the results announcement, which also included a 4% dividend raise and a new $90 billion share-buyback program. Apple’s stock had also lost 1% during the regular session Thursday after
Qualcomm
—which supplies modem chips for the iPhone—issued a more downbeat projection for the June quarter.

In all, the results reflected a relatively drama-free period for Apple, which had spent the previous quarter swept up in the tumult of China’s domestic politics. Harsh Covid lockdowns sparked social unrest that hobbled Apple’s production in the country that makes nearly all of its devices. Apple is slowly working to diversify its manufacturing footprint, but that will take quite some time. Meanwhile, the company is expanding its presence in relatively untapped markets such as India, where it opened two of its retail stores last month.

Apple investors, meanwhile, are becoming increasingly keen on what is coming next. The company is widely expected to lift the wraps on a new augmented/virtual reality device at its developers conference early next month. That would mark Apple’s first foray into a product category that has so far mostly racked up misfires. But Apple’s shares are now up 28% year to date, the stock’s biggest gain between the start of the year and its fiscal second-quarter earnings report since 2012. That one more thing can’t afford to be a flop.

Write to Dan Gallagher at dan.gallagher@wsj.com

AAPL – Apple (AAPL) Q2 Earnings and Revenues Beat Estimates

Written by Zacks Equity Research on May 4, 2023. Posted in AAPL, Stock Report.

Apple (AAPL – Free Report) came out with quarterly earnings of $1.52 per share, beating the Zacks Consensus Estimate of $1.44 per share. This compares to earnings of $1.52 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 5.56%. A quarter ago, it was expected that this maker of iPhones, iPads and other products would post earnings of $1.93 per share when it actually produced earnings of $1.88, delivering a surprise of -2.59%.

Over the last four quarters, the company has surpassed consensus EPS estimates three times.

Apple, which belongs to the Zacks Computer – Mini computers industry, posted revenues of $94.84 billion for the quarter ended March 2023, surpassing the Zacks Consensus Estimate by 1.63%. This compares to year-ago revenues of $97.28 billion. The company has topped consensus revenue estimates three times over the last four quarters.

The sustainability of the stock’s immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management’s commentary on the earnings call.

Apple shares have added about 28.9% since the beginning of the year versus the S&P 500’s gain of 6.5%.

What’s Next for Apple?

While Apple has outperformed the market so far this year, the question that comes to investors’ minds is: what’s next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company’s earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Apple: mixed. While the magnitude and direction of estimate revisions could change following the company’s just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $1.21 on $84.11 billion in revenues for the coming quarter and $6.01 on $387.99 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Computer – Mini computers is currently in the top 26% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Another stock from the same industry, 3D Systems (DDD – Free Report) , has yet to report results for the quarter ended March 2023. The results are expected to be released on May 8.

This maker of 3D printers is expected to post quarterly loss of $0.08 per share in its upcoming report, which represents a year-over-year change of -33.3%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

3D Systems’ revenues are expected to be $130.38 million, down 2% from the year-ago quarter.

AAPL – How Will Apple’s Earnings Trend As IDevice Sales Slow

Written by Trefis Team on May 3, 2023. Posted in AAPL, Stock Report.

Apple is slated to report its Q2 FY’23 results on May 4, reporting on a quarter that likely saw the company’s sales contract amid weaker demand for computing devices and headwinds in the digital services business. We estimate that Apple’s revenue will come in at about $93 billion for the quarter, roughly in line with consensus estimates and about 4% lower compared to last year. We estimate that earnings will stand at close to $1.45 per share, compared to a consensus of $1.43 per share. So what are some of the trends that are likely to drive Apple’s results? See our interactive dashboard analysis on Apple Earnings Preview for more details on how Apple’s revenues and earnings are likely to trend for the quarter.

We expect to see slower sales of iPhones, amid economic concerns and weaker consumer spending. However, this could be partially offset by improved availability of the flagship iPhone Pro devices, which remained undersupplied through the holiday quarter. Apple’s other computing devices are also likely to see slower sales. While the iPad could see demand cool versus last year, as the remote working and learning trend seen through the Covid-19 pandemic tapers off. Mac sales are expected to see a more severe slump. For perspective, IDC estimates that Apple’s Mac sales declined by close to 40.5% in Q1 2023. However, this could be offset, in part, by sales of pricier devices such as the Macbook Pros and the all-new Macbook Air.

We will be closely watching the performance of Apple’s services business. Services sales have slowed down meaningfully, with revenue growing by just 6.4% in Q1 FY’23 and by about 5% in Q4 FY’22, compared to double-digit levels in the year-ago quarter. This is concerning, given that services are very lucrative, with segment gross margins typically standing at over 70%. The decline is likely being led by the AppStore, with people spending less on gaming and apps as Covid-19 eases.

So is Apple stock a buy ahead of earnings? While Apple stock could move slightly higher if it beats earnings, we believe the stock is fundamentally overvalued at current levels of about $170 per share. The stock trades at about 28x forward earnings, which we believe is high, given that Apple’s earnings are poised to contract this year per consensus estimates, with revenue growth projected to remain slow over the next year as well. We value Apple at about $160 per share, about 5% below the market price. See our analysis of Apple Valuation for more details on what’s driving our price estimate for Apple and how it compares with peers.

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AAPL – Big Tech Earnings: Time to Take Another Bite of Apple?

Written by Derek Lewis on May 1, 2023. Posted in AAPL, Stock Report.

Earnings season has been in high gear for some time now, with a feared ‘earnings apocalypse’ failing to materialize.

Last week, as many are highly aware, big-tech stole the spotlight, posting results that had the market celebrating and helping keep sentiment lifted heading into this week’s FOMC meeting.

We now have four quarterly prints from the ‘Big 5 Tech Players’, a list that includes Meta Platforms (META – Free Report) , Alphabet (GOOGL – Free Report) , Microsoft (MSFT – Free Report) , Amazon (AMZN – Free Report) .

And then there’s Apple (AAPL – Free Report) , the last of the group slated to report and arguably the most important of the five. The company will reveal its quarterly results this Thursday, May 4^th, after the market’s close.

All styles of investors will be tuning into the quarterly results, as Apple carries the biggest weight in the S&P 500, roughly 7%. Let’s take a closer look at how the mega-cap titan stacks up heading into its quarterly release.

Quarterly Estimates

Since February of this year, the quarterly EPS estimate for Apple’s upcoming release has been revised 0.7% higher to $1.44 per share, with the value reflecting a modest 5.3% year-over-year pullback in earnings.