Black Friday is set to kick off this year’s holiday shopping season on November 25, with Apple (AAPL - Free Report) products surely on many shoppers’ lists. October consumer prices were also lower than expected, indicating inflation has begun to somewhat ease.
Trading roughly 19% from its highs this has created a more favorable scenario for AAPL stock heading into the new year.
Apple Products
This holiday season will be important in the hopes that Apple products will continue to boost revenue and support the company’s expansion in paid services. Mac computers and Apple tablet sales will be significant along with iPhone and accessories revenue.
Last quarter, iPhone sales increased 10% to $42.6 billion but this was much slower growth compared to the 47% increase in the same period last year. MacBook revenue was up 25% to $11.5 billion and Wearable, Home, and Accessories were also up 10% to $9.6 billion.
The only product not seeing growth was the iPad, which was down -13% to $7.1 billion. Product revenue was $70.9 billion in Q4 accounting for 79% of Apple’s $90.1 billion in total net sales.
Overall, Apple’s product growth during the company’s fiscal Q4 helped cap off another record-breaking year with revenue growing over $28 billion and operating cash flow up $18 billion from last year.
Investors will be hoping Black Friday and Christmas shopping will give AAPL stock an accelerated push for the company’s FY23. This is especially true after Apple warned of a slowdown during the current quarter like fellow big tech peers Alphabet (GOOGL - Free Report) , Amazon (AMZN - Free Report) , and Microsoft (MSFT - Free Report) .
Even so, CEO Tim Cook said the company has its most powerful lineup ever heading into the holiday season. Centered around the iPhone 14, perhaps the strong product lineup will begin boosting AAPL’s outlook.
Outlook
Year over year, AAPL earnings are expected to rise 2% in its fiscal 2023 and another 8% in FY24 at $6.76 per share. However, earnings estimates for FY23 and FY24 have trended down over the last 90 days.
Top line growth is expected, with sales projected to be up 3% in FY23 and rise another 5% in FY24 to $429.12 billion. FY24 sales projections would represent 65% growth from pre-pandemic levels with 2019 sales at $260.17 billion.
Performance & Valuation
Apple is still down -16% YTD to slightly outperform the S&P 500’s -18% and above the Nasdaq’s -29% drop. Even better, over the last decade, AAPL is up +628% to crush the benchmark and the Nasdaq.
Trading around $148 a share, AAPL has a forward P/E of 24.1X. This is well above the industry average of 8.2X. However, Wall Street still appears to be content with paying a premium for Apple’s stock at the moment. AAPL trades at a discount to its decade-high of 38.6X but above the median of 15.6X.
Piggybacking off of Apples operating cash flow being up $18 billion in 2022, we can see from the above chart that Apple’s cash flow per share has impressively increased over the last decade. Currently, at 6.8X, AAPL’s cash flow per share is nicely above the industry average of 5X, with many analysts believing this is a better indication of a company’s business strength than EPS.
Bottom Line
AAPL currently lands a Zacks Rank #3 (Hold) and the stock could see more short-term volatility ahead. However, Apple has continued to be a cash king and this is important amid economic uncertainty. AAPL also trades reasonably relative to its past and a strong holiday season would provide some nice momentum for the stock.
Where Will Stocks Go…
If Biden Wins? If Trump Wins?
The answers may surprise you.
Since 1950, even after negative midterm years, the market has never had a lower presidential election year. With voters energized and engaged, the market has been almost unrelentingly bullish no matter which party wins!
Now is the time to download Zacks' free Special Report with 5 stocks that offer extreme upside for both Democrats and Republicans…
1. Medical manufacturer has gained +11,000% in the last 15 years.
2. Rental company is absolutely crushing its sector.
3. Energy powerhouse plans to grow its already large dividend by 25%.
4. Aerospace and defense standout just landed a potentially $80 billion contract.
5. Giant Chipmaker is building huge plants in the U.S.
Hurry, Download Special Report FREE >>
Black Friday is set to kick off this year’s holiday shopping season on November 25, with Apple (AAPL - Free Report) products surely on many shoppers’ lists. October consumer prices were also lower than expected, indicating inflation has begun to somewhat ease.
Trading roughly 19% from its highs this has created a more favorable scenario for AAPL stock heading into the new year.
Apple Products
This holiday season will be important in the hopes that Apple products will continue to boost revenue and support the company’s expansion in paid services. Mac computers and Apple tablet sales will be significant along with iPhone and accessories revenue.
Last quarter, iPhone sales increased 10% to $42.6 billion but this was much slower growth compared to the 47% increase in the same period last year. MacBook revenue was up 25% to $11.5 billion and Wearable, Home, and Accessories were also up 10% to $9.6 billion.
The only product not seeing growth was the iPad, which was down -13% to $7.1 billion. Product revenue was $70.9 billion in Q4 accounting for 79% of Apple’s $90.1 billion in total net sales.
Overall, Apple’s product growth during the company’s fiscal Q4 helped cap off another record-breaking year with revenue growing over $28 billion and operating cash flow up $18 billion from last year.
Investors will be hoping Black Friday and Christmas shopping will give AAPL stock an accelerated push for the company’s FY23. This is especially true after Apple warned of a slowdown during the current quarter like fellow big tech peers Alphabet (GOOGL - Free Report) , Amazon (AMZN - Free Report) , and Microsoft (MSFT - Free Report) .
Even so, CEO Tim Cook said the company has its most powerful lineup ever heading into the holiday season. Centered around the iPhone 14, perhaps the strong product lineup will begin boosting AAPL’s outlook.
Outlook
Year over year, AAPL earnings are expected to rise 2% in its fiscal 2023 and another 8% in FY24 at $6.76 per share. However, earnings estimates for FY23 and FY24 have trended down over the last 90 days.
Top line growth is expected, with sales projected to be up 3% in FY23 and rise another 5% in FY24 to $429.12 billion. FY24 sales projections would represent 65% growth from pre-pandemic levels with 2019 sales at $260.17 billion.
Performance & Valuation
Apple is still down -16% YTD to slightly outperform the S&P 500’s -18% and above the Nasdaq’s -29% drop. Even better, over the last decade, AAPL is up +628% to crush the benchmark and the Nasdaq.
Trading around $148 a share, AAPL has a forward P/E of 24.1X. This is well above the industry average of 8.2X. However, Wall Street still appears to be content with paying a premium for Apple’s stock at the moment. AAPL trades at a discount to its decade-high of 38.6X but above the median of 15.6X.
Piggybacking off of Apples operating cash flow being up $18 billion in 2022, we can see from the above chart that Apple’s cash flow per share has impressively increased over the last decade. Currently, at 6.8X, AAPL’s cash flow per share is nicely above the industry average of 5X, with many analysts believing this is a better indication of a company’s business strength than EPS.
Bottom Line
AAPL currently lands a Zacks Rank #3 (Hold) and the stock could see more short-term volatility ahead. However, Apple has continued to be a cash king and this is important amid economic uncertainty. AAPL also trades reasonably relative to its past and a strong holiday season would provide some nice momentum for the stock.
Where Will Stocks Go…
If Biden Wins? If Trump Wins?
The answers may surprise you.
Since 1950, even after negative midterm years, the market has never had a lower presidential election year. With voters energized and engaged, the market has been almost unrelentingly bullish no matter which party wins!
Now is the time to download Zacks' free Special Report with 5 stocks that offer extreme upside for both Democrats and Republicans…
1. Medical manufacturer has gained +11,000% in the last 15 years.
2. Rental company is absolutely crushing its sector.
3. Energy powerhouse plans to grow its already large dividend by 25%.
4. Aerospace and defense standout just landed a potentially $80 billion contract.
5. Giant Chipmaker is building huge plants in the U.S.
Hurry, Download Special Report FREE >>
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