Apple (AAPL) posted earnings after the bell on Monday, and once again AAPL stock proved why it’s one of the most popular investments on Wall Street.
Apple earnings looked solid across the board, with numbers ahead of expectation on both the top and the bottom line. AAPL stock lifted a bit after hours as a result.
Here are the specifics:
- Revenue: $42.12 billion vs. a target of $39.85 billion.
- Earnings: $1.42 per share vs. a target of $1.31.
- iPhone sales: 39.27 million units vs. a target of 38 million.
- Gross margins: 38%, right in line with the target.
Also encouraging was the forward guidance for its fiscal Q1 report. Apple revenue is now forecast to come in between $63.5 billion and $66.5 billion. That’s up from $57.6 billion a year ago, for an 11% jump. Apple gross margin is also predicted to be between 37.5% to 38.5%, on par with current margins and avoiding a slowdown that many investors have feared as the company matures and sells more older (and cheaper) iPhones.
Just about the only disappointing figure was the lagging iPad sales in Apple earnings. Specifically, Apple moved 12.3 million iPads in its fiscal fourth quarter vs. targets of 13 million.
As I wrote recently, the sluggish iPad segment is one of the biggest risks to AAPL stock holders. Apple iPhone sales are about half of revenue, and they are what clearly drive Apple stock. However, the next largest segment by revenue is the Apple iPad — and unfortunately, this number continues to be under pressure while the rest of AAPL is growing.
Still, the bottom line is the bottom line … and Apple’s brisk iPhone sales after its new device launch and its continued growth in overseas markets has served Apple shareholders quite well.
Throw in massive stock buybacks and a nearly 1.9% dividend yield, and you’ve got quite a powerful tech stock here after Apple Q4 earnings.
The iPad sales are disappointing, but remember that Apple CEO Tim Cook just unveiled a new iPad Air and iPad Mini at a big event last week with the goal of propping up sales and forcing older iPad users into the upgrade cycle. This could very well prop up future sales, even if these backwards-looking ones are disappointing.
All in all, with strong earnings and revenue coupled with a firm margin … AAPL stock is looking quite good after earnings.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP.
