We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Time to Buy Stock in the World's Most Valuable Company as Earnings Approach?
Read MoreHide Full Article
As the world’s most valuable company, markets will pay close attention to results for Apple’s (AAPL - Free Report) fiscal third quarter on Thursday, August 1.
Edging Microsoft (MSFT - Free Report) with a market cap of over $3.3 trillion, let’s see if it’s time to buy Apple’s stock as earnings approach.
Image Source: Zacks Investment Research
Apple’s Q3 Expectations
Ranging from games to subscriptions for movies and music, services revenue has helped sustain Apple’s robust top line. Along with its iconic app store, this includes Apple Pay and AppleCare with Q3 Services revenue expected to spike 13% to $23.99 billion.
However, Product revenue which is led by Apple’s flagship iPhone is expected to dip to $60.06 billion compared to $60.58 billion in the comparative quarter. Overall, Apple’s Q3 sales are still projected to rise 3% to $84.38 billion.
On the bottom line, Apple’s Q2 EPS is thought to have increased 6% to $1.34 versus $1.26 per share a year ago. Notably, Apple has surpassed bottom line expectations for five consecutive quarters posting an average earnings surprise of 4.14% in its last four quarterly reports.
Image Source: Zacks Investment Research
Apple Intelligence
Wall Street will be looking for updates on Apple’s plans to expand into generative AI which will concentrate on personal intelligence systems for the iPhone, iPad, and MacBook. Apple is also testing a ChatGPT-style generative AI tool called “ASK” for AppleCare Support along with upgrading its digital voice assistant Siri.
Apple has stated it believes in the transformative power and promise of AI and has the advantages to differentiate itself in the new era of tech. The company has worked closely with Taiwan Semiconductor (TSM - Free Report) in this regard which provides the M3 chip for its MacBook Air. Apple deems the MacBook Air as the best consumer laptop for AI with breakthrough performance including a more powerful neural engine.
YTD Performance
Year to date, Apple’s stock is up a respectable +12% although this has slightly trailed the broader indexes and most of its "Magnificent Seven" peers outside of Microsoft and Tesla (TSLA - Free Report) .
Image Source: Zacks Investment Research
Monitoring Apple’s Valuation
Checking out one of Apple’s key fundamental valuation metrics, AAPL currently commands a modest premium to the broader market at 33.1X forward earnings compared to the S&P 500’s 23X. It’s noteworthy that Apple trades below its decade-long high of 38.6X forward earnings but noticeably above the median of 18.1X.
Image Source: Zacks Investment Research
Takeaway
Ahead of its Q3 report, Apple’s stock lands a Zacks Rank #3 (Hold). Reaching or exceeding quarterly expectations may be crucial to more upside in Apple’s stock as its valuation does allude to the notion that there could be better buying opportunities ahead.
That said, Apple is a cash cow that has the resources to expand and potentially capitalize on artificial intelligence which could be very rewarding for long-term investors.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Time to Buy Stock in the World's Most Valuable Company as Earnings Approach?
As the world’s most valuable company, markets will pay close attention to results for Apple’s (AAPL - Free Report) fiscal third quarter on Thursday, August 1.
Edging Microsoft (MSFT - Free Report) with a market cap of over $3.3 trillion, let’s see if it’s time to buy Apple’s stock as earnings approach.
Image Source: Zacks Investment Research
Apple’s Q3 Expectations
Ranging from games to subscriptions for movies and music, services revenue has helped sustain Apple’s robust top line. Along with its iconic app store, this includes Apple Pay and AppleCare with Q3 Services revenue expected to spike 13% to $23.99 billion.
However, Product revenue which is led by Apple’s flagship iPhone is expected to dip to $60.06 billion compared to $60.58 billion in the comparative quarter. Overall, Apple’s Q3 sales are still projected to rise 3% to $84.38 billion.
On the bottom line, Apple’s Q2 EPS is thought to have increased 6% to $1.34 versus $1.26 per share a year ago. Notably, Apple has surpassed bottom line expectations for five consecutive quarters posting an average earnings surprise of 4.14% in its last four quarterly reports.
Image Source: Zacks Investment Research
Apple Intelligence
Wall Street will be looking for updates on Apple’s plans to expand into generative AI which will concentrate on personal intelligence systems for the iPhone, iPad, and MacBook. Apple is also testing a ChatGPT-style generative AI tool called “ASK” for AppleCare Support along with upgrading its digital voice assistant Siri.
Apple has stated it believes in the transformative power and promise of AI and has the advantages to differentiate itself in the new era of tech. The company has worked closely with Taiwan Semiconductor (TSM - Free Report) in this regard which provides the M3 chip for its MacBook Air. Apple deems the MacBook Air as the best consumer laptop for AI with breakthrough performance including a more powerful neural engine.
YTD Performance
Year to date, Apple’s stock is up a respectable +12% although this has slightly trailed the broader indexes and most of its "Magnificent Seven" peers outside of Microsoft and Tesla (TSLA - Free Report) .
Image Source: Zacks Investment Research
Monitoring Apple’s Valuation
Checking out one of Apple’s key fundamental valuation metrics, AAPL currently commands a modest premium to the broader market at 33.1X forward earnings compared to the S&P 500’s 23X. It’s noteworthy that Apple trades below its decade-long high of 38.6X forward earnings but noticeably above the median of 18.1X.
Image Source: Zacks Investment Research
Takeaway
Ahead of its Q3 report, Apple’s stock lands a Zacks Rank #3 (Hold). Reaching or exceeding quarterly expectations may be crucial to more upside in Apple’s stock as its valuation does allude to the notion that there could be better buying opportunities ahead.
That said, Apple is a cash cow that has the resources to expand and potentially capitalize on artificial intelligence which could be very rewarding for long-term investors.