AAPL Stock: What to Expect From Apple Inc. Earnings
Apple Inc. (Nasdaq: AAPL) stock is limping into the company's fiscal second-quarter earnings report expected out after the market close May 1. Investors are likely most concerned with iPhone sales and guidance, but there are several other key metrics and trends that analysts will be watching closely.
Analysts are expecting Apple to report second-quarter earnings per share of $2.69 on revenue of $60.9 billion. That revenue number would represent 15.1 percent year-over-year growth.
[See: 6 Reasons to Love Apple Stock in 2018.]
However, the most important numbers for Apple investors will be second-quarter iPhone unit sales and third-quarter iPhone sales guidance. Bank of America analyst Wamsi Mohan says Apple will likely report second-quarter iPhone unit sales of around 53 million, mostly in-line with consensus estimates of 52.9 million.
But more importantly, Bank of America expects Apple to guide for just 40 million iPhone unit sales in the fiscal third quarter, below consensus estimates of 42 million. Mohan says recent data points and earnings commentary from Apple suppliers suggest June quarter iPhone unit guidance could be as low as 35 million. Even at just 40 million, Bank of America's estimate represents an 11 percent year-over-year decline in the fiscal third quarter.
"With an in line March quarter and a June guide behind us post-earnings ... the focus will move to capital return, the ability to drive iPhone revenue growth in [the second half of 2018] and margin upside from FX/commodity tailwinds in [2019]," Mohan says.
Mohan expects Apple to add between $70 billion and $75 billion to its total capital return this year. If Apple's iPhone growth continues to show signs of slowing, buybacks and the stock's 1.5 percent dividend will become even more important for investors.
Another number that could become increasingly important in a maturing iPhone market is Apple's Services and Accessories revenue. Bank of America is calling for 20 percent services revenue growth on the quarter.
GBH Insights head of technology research Daniel Ives says Wall Street is in "full panic mode" when it comes to Apple.
[See: Warren Buffett's 8 Favorite Stocks.]
"While the Street (and the stock) have been reflecting soft June guidance, the big question now is what will the demand picture look like post-June with a much anticipated three-pronged smartphone product cycle around the corner," Ives says.
Bank of America has a "buy" rating and $220 price target for Apple. GBH Insights has a "highly attractive" rating and $200 target for AAPL stock.
Wayne Duggan is a freelance investment strategy reporter with a focus on energy and emerging market stocks. He has a degree in brain and cognitive sciences from the Massachusetts Institute of Technology and specializes in the psychological challenges of investing. He is a senior financial market reporter for Benzinga and has contributed financial market analysis to Motley Fool, Seeking Alpha and InvestorPlace. He is also the author of the book "Beating Wall Street With Common Sense," which focuses on the practical strategies he has used to outperform the stock market. You can follow him on Twitter @DugganSense, check out his latest content at tradingcommonsense.com or email him at wpd@tradingcommonsense.com.
