Apple is expected to join the $ 100 billion club when the proceeds are released
Did someone say $ 100 billion? And then some? Wall Street analysts did. A consensus has been that Apple Inc (NASDAQ: AAPL) will join the diluted group of companies that passed the quarterly revenue mark of $ 100 billion when it opened its fiscal year first books on Wednesday. That is, of course, a record for AAPL and may have been helped by Christmas sales of its new iPhone 12. But it’s one of several new highs AAPL has achieved in a year – one that the company has recognized as having been shaken in many nooks and crannies of adversity. CFO Luca Maestri said the strong results in last quarter’s report were due to « the unmatched loyalty of our customers ». That may or may not be true, but when AAPL reports profits, investors will also be listening to how well AAPL is playing the market share game. The pandemic-fueled work-from-home trend appears to have been a fundamental shift for AAPL, according to Morningstar analysts who believe it will drive sales of iPads, desktops and laptops. Anything that could be overshadowed by iPhone 12 Christmas sales in the fiscal first quarter, which is likely to be said, will get a fair share of attention on Wednesday afternoon after the closing bell. AAPL has always been a stunner with the earnings season rolling around it, and now that it has a market cap of $ 2.34 trillion and is making new stock price highs, it looks like it is sure to take a place in the spotlight, even if it against a host of other high profile tech stock results this week. Tesla Inc (NASDAQ: TSLA) and Facebook, Inc. (NASDAQ: FB) report that same afternoon. Numbers Wall Street analysts expect AAPL sales to increase, according to F. actSet will grow 12% year-on-year to around USD 103 billion. However, some companies like Loup Ventures are looking for much stronger numbers: up 19% to $ 109.5 billion. From an earnings standpoint, the Street hit a consensus of $ 1.41 per share. Morgan Stanley (NYSE: MS) also predicts on the high side of the consensus, watching revenge $ 108.2 billion and earnings per share of $ 1.50. « Our recent discussions suggest that investors expect Apple to release solid but not great results for the December quarter, » Morgan Stanley analysts wrote in a recently released report. “We disagree and believe that Apple is expected to have record sales and earnings each quarter. « In our view, the iPhone 12 was Apple’s most successful product launch in the past five years, » they said. More on that later. Whichever way you look at it, the numbers look robust. The innovation machine AAPL no longer issued guidelines last year – similar to many other companies who are unsure about the effects of COVID-19 on their sales. In March, no one knew how the pandemic could affect or how long it could last. We still don’t know everything, but we’ve found that the city and state mandated quarantines and the general fear of being in public helped fuel many trends that are already picking up speed. The digital transformation has accelerated, and it looks like AAPL was well positioned for that. While the iPhone 12 might get the most attention on Wednesday, think back to the last quarter when CEO Tim Cook set records for Mac and Services. Although he had not given a forecast for the past quarter per se, he struck he posted double-digit increases across all product categories except the iPhone 12, which he believed would see single-digit increases. FIGURE 1: APPLE LEAVES THE INDEX IN THE DUST. Last year, Apple shares (AAPL – Candlestick) significantly outperformed the Nasdaq 100 index (NDX – purple line). Apple stock got off to a quick start in 2021, and investors seem excited about the earnings outlook for tomorrow’s first quarter. Data source: Nasdaq. Diagram source: TD Ameritrade’s thinkorswim® platform. For illustration only. Past performance does not guarantee future results. The Launch of the Mighty iPhone 5G Despite all of the happy discussions about fourth quarter earnings, the iPhone is weaker than expected, Ales made up for the joy, dragging stocks down nearly 6% in the first few days after earnings were released in October. You have since recovered. AAPL reported iPhone sales of $ 26.4 billion for the fourth quarter of fiscal year, lower than the $ 27.73 billion Street expected. Much of this deficit was attributed to AAPL’s decision to postpone the iPhone 12 launch into the final quarter. Many believe that this caused consumers to wait for the upgrade before purchasing. Back then, some analysts said a move to 5G could be a tailwind for the iPhone 12 with promotional and subscription service packages. Coupled with the major Christmas business season ahead, this could have resulted in a quick start to the new phone. We’ll see now if they were right. For the most part, analysts are optimistic about their iPhone sales expectations. Some say the delay will increase iPhone sales by around $ 4 billion from the third quarter of business fiscal year could have been postponed to the December quarter. The street’s consensus was most recently at $ 59.58 billion, up more than 6% year over year. Loup Ventures thinks this is conservative, however. Revenue is expected to grow 16% year over year to $ 64.9 billion, which is 59% of total revenue compared to the typical 50% of iPhone sales. It’s unclear if this will actually be the case, but if it does, it would reverse the trend in recent years for iPhones to contribute less to AAPL’s overall sales. The company has emphasized growth in services. Recall that we are only two years after January 2019 when Cook sent a letter to AAPL investors warning of a decline in earnings in the first quarter, partly due to weak iPhone sales in China. How things have changed. AAPL Earnings and Options Activity AAPL is expected to post adjusted earnings per share of $ 1.41, according to estimates by third party consensus analysts, down from $ 1.25 in the year-ago quarter. Revenue is forecast at $ 103.01 billion, up 16.4% year over year. The options market has priced in an expected share price. According to the Market Maker Move ™ indicator on the thinkorswim® platform, you are moving 6.2% in either direction around the earnings announcement. With the options expiring on Jan. 29, the puts on strikes 125 and 135 were active. But it was dwarfed by the upward activity and high call volume on the 145 and 150 strikes. The implied volatility is at the 34th percentile on Tuesday morning. Note: Call options represent the right, but not the obligation, to buy the underlying security at a specified price over a specified period of time. Put options represent s the right, but not the obligation, to sell the underlying security at a specified price over a specified period of time. Working from Home and Its Tools The phenomenon of working and learning from home has contributed to spike in sales of Macs and iPads over the past year, and analysts generally believe this trend will continue into the first quarter of the fiscal year. New iPads and iPad Airs came out with a range of bells and whistles, and new computers launched with AAPL’s custom M1 chip, which replaces the Intel Corporation (NASDAQ: INTC) chip. AAPL is also reportedly working on a new iPad Pro, which is expected to be released in mid-March. There is also talk on Wall Street that AAPL may have patented a new version of the Magic Keyboard for the iPad Pro. Given Cook’s comments on “the most productive phase of launch,” analysts generally expect more new products to go online. An update to the MacBook Air is one of those possible developments. AAPL is working on a thinner and lighter version of the MacBook Air, Bloomberg reported late last week, citing “People with knowledge of the matter. Analysts wanted to know whether the planned release in the second half of the year is on the right track. Analysts at Monness, Crespi, Hardt & amp; Co. expects AAPL to shed light on some new products and services, including sales trends for the $ 549 AirPods Max over-the-ear headphones and Apple Fitness + subscription, as well as ways to bundle s services together for one Discount. « We believe Apple’s portfolio was better positioned than ever over the last holiday season, while Planet Apple’s product and service updates position well in 2021, » the team wrote. And So Much More Of the myriad reasons AAPL’s revenues are so high that products aren’t just products. AAPL has done a lot to address many of these issues, but each quarter tends to introduce a new harvest. In November, for example, AAPL announced that it would cut commission in half for smaller developers who sell software through the App Store and have sales below $ 1 million. AAPL’s original 30% adoption has long led to complaints from developers, users, and governments about its dominance in the digital world. The price cut to 15% has reassured some but not all stakeholders and analysts in the hope that the company will look at the effects of the cuts in the first few weeks. Another question about the outcome is AAPL’s cash position. At the end of its fourth fiscal year, the company’s total inventory was approximately $ 192 billion, with approximately $ 112 billion in debt and just over $ 79 billion in cash. AAPL returned nearly $ 22 billion to shareholders in buybacks and dividends. According to Loup Ventures, investors can expect another $ 73 billion to be returned in the coming years. TD Ameritrade® commentary for educational purposes only. Member of SIPC. Options involve risks and are not suitable for all investors. Please read the characteristics and risks of standardized options. Photo by Trac Vu on Unsplash For More Info From Benzinga Click here for option deals from BenzingaBoeing. Johnson, 3M early, was later followed by Von Microsoft © 2021 Benzinga.com. Benzinga does not offer investment advice. All rights reserved.