Will Apple stock rise further after Q4 results? It has risen 34% this year

Apple
AAPL
Results for the fourth quarter of fiscal 2023 are expected to be published in early November, reporting a quarter in which demand for Apple’s core computing products is likely to continue to slow. We expect earnings to be around $1.32 per share, which is slightly ahead of consensus estimates. On the other hand, we expect revenues to come in at about $84.1 billion, a decline of about 6.5% from last year and slightly below the consensus estimate. So what are the trends that could impact Apple’s results for the quarter?

Amid the current financial backdrop, AAPL stock has posted a strong 35% gain from the $130 level in early January 2021 to now around $175, compared to about 10% for the S&P 500 over this nearly 3-year period. developed. However, the rise in AAPL stock has not been consistent. Returns for the stock were 35% in 2021, -26% in 2022, and 34% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 10% in 2023 – which suggests that AAPL underperforms S&P In 2022. In fact, Consistently beating the S&P 500 Individual stocks have had it tough in recent years – in good times and bad; To other giants of the information technology sector, including MSFT, NVDA, and AVGO, and even to megacap stars GOOG, TSLA, and AMZN. In contrast, the Trefis High Quality Portfolio is a collection of 30 stocks. Outperformed the S&P 500 every year At the same time. Why so? As a group, HQ Portfolio stocks provided better returns with less risk than the benchmark index; Clearly less of a roller-coaster ride in HQ portfolio performance metrics. Given the current uncertain macroeconomic environment with high oil prices and high interest rates, could AAPL face a similar situation in 2022 and S&P’s performance is poor Over the next 12 months – or will we see a huge surge?

Overall, we expect sales of products like the Mac and iPad to also decline year-over-year as remote work becomes easier and the broader PC and tablet market cools. For example, Gartner
it
indicated that global PC shipments declined 9% in the third quarter, while Apple’s Mac shipments declined an estimated 24%. However, iPhone sales may prove to be a bit more resilient, given what Apple is looking at in markets like India, Indonesia and Turkey, where installment plans and trade-in programs are helping drive demand. While Apple released its latest iPhone 15 smartphones at the end of the quarter, we don’t expect to see any meaningful impact from the new devices, which were only on sale for a little over a week during the quarter. Apple’s digital services business should help Apple overcome the slowdown in its hardware business, partly due to higher sales on the AppStore and improved uptake of other subscription services. However, the growth rate is likely to remain below the level seen last year. For example, in the first 9 months of this fiscal year, services sales grew by nearly 9%. We also expect Apple’s gross margins to remain stable due to a higher mix of services sales, a more favorable sales mix leaning toward premium products, and some cost savings. In the third quarter of 2023, gross margin stood at 44.5%, compared to 43% in the year-ago quarter.

Although Apple stock could move higher if it beats earnings, we believe the stock is slightly overvalued at its current level of approximately $173 per share. Apple stock is currently trading at 30x 2023 earnings, which is high relative to historical levels. Additionally, consensus estimates project Apple’s earnings will decline this year, with revenue growth expected to slow next year as well. We value Apple at about $168 per share, which is about 3% below the market value. See our analysis apple evaluation Read on for more details on what our price estimate for Apple is and how it compares to competitors.

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