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Apple Beats Fiscal Q4, iPhone Sales Drop: ETFs in Focus
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After the closing bell yesterday, Apple Inc. (AAPL - Free Report) encouraged its investors with blockbuster fourth-quarter fiscal 2020 results, wherein it topped both earnings and revenue estimates. Although iPhone sales disappointed, sales of Macs and accessories such as AirPods surged as the pandemic has forced millions of people to work and study from home, spurring demand for Apple devices (read: Coronavirus-Themed ETFs in Focus as the Pandemic Worsens).
Apple Q4 Results in Focus
Earnings per share came in at 73 cents, beating the Zacks Consensus Estimate by 4 cents but declined from the year-ago earnings of 76 cents. Revenues rose 1% year over year to a record $64.7 billion and edged past the estimate of $63.39 billion. Robust results were driven by strong growth across all geographic segments, excluding Greater China, and major product categories excluding iPhone.
iPhone sales dropped 21% to $26.4 billion as customers held off buying new handsets ahead of the iPhone 12 launch in October. Meanwhile, services revenues, comprising iTunes, Apple Music, iCloud, Apple Pay and Apple Care, climbed 16% year over year to $14.5 billion. Revenues from Wearables, Home and Accessories, which include Apple Watch, AirPods, HomePod, Apple TV and Beats headphones, soared 21% to $7.90 billion. iPad and Mac sales increased 46% and 29%, respectively, due to the pandemic, which has resulted in remote working and learning.
The gadget-maker did not provide any guidance for the holiday quarter but said that its revenues from services and non-iPhone products would grow by double-digit percentages in the fiscal first quarter (read: ETFs to Gain on Apple's New 5G iPhones, Analysts Optimism).
Market Impact
Despite earnings beat, shares of Apple fell more than 5% in after-hours trade, wiping out $100 billion from its stock market value. A sharp decline in iPhone sales and a lack of forward guidance disappointed investors. The stock currently has a Zacks Rank #3 (Hold) and VGM Score of B. However, it belongs to a bottom-ranked Zacks industry (bottom 10%).
ETFs to Tap
Given this, investors could consider the following ETFs with the largest allocation to the tech titan. These funds have Apple as the top or second firm with a double-digit allocation and sport a Zacks Rank #1 (Strong Buy) with a Medium risk outlook.
This ETF provides investors exposure to technology stocks with a 20% allocation in Apple. The fund has AUM of $6.1 billion and charges 43 bps in fees and expenses.
This fund manages about $36.6 billion in its asset base with 21.9% allocation in Apple. It has 0.10% in expense ratio (see: all the Technology ETFs here).
This ETF provides exposure to the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization, and Apple accounts for 12% share. It has AUM of $135.6 billion and charges 20 bps in annual fees.
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Apple Beats Fiscal Q4, iPhone Sales Drop: ETFs in Focus
After the closing bell yesterday, Apple Inc. (AAPL - Free Report) encouraged its investors with blockbuster fourth-quarter fiscal 2020 results, wherein it topped both earnings and revenue estimates. Although iPhone sales disappointed, sales of Macs and accessories such as AirPods surged as the pandemic has forced millions of people to work and study from home, spurring demand for Apple devices (read: Coronavirus-Themed ETFs in Focus as the Pandemic Worsens).
Apple Q4 Results in Focus
Earnings per share came in at 73 cents, beating the Zacks Consensus Estimate by 4 cents but declined from the year-ago earnings of 76 cents. Revenues rose 1% year over year to a record $64.7 billion and edged past the estimate of $63.39 billion. Robust results were driven by strong growth across all geographic segments, excluding Greater China, and major product categories excluding iPhone.
iPhone sales dropped 21% to $26.4 billion as customers held off buying new handsets ahead of the iPhone 12 launch in October. Meanwhile, services revenues, comprising iTunes, Apple Music, iCloud, Apple Pay and Apple Care, climbed 16% year over year to $14.5 billion. Revenues from Wearables, Home and Accessories, which include Apple Watch, AirPods, HomePod, Apple TV and Beats headphones, soared 21% to $7.90 billion. iPad and Mac sales increased 46% and 29%, respectively, due to the pandemic, which has resulted in remote working and learning.
The gadget-maker did not provide any guidance for the holiday quarter but said that its revenues from services and non-iPhone products would grow by double-digit percentages in the fiscal first quarter (read: ETFs to Gain on Apple's New 5G iPhones, Analysts Optimism).
Market Impact
Despite earnings beat, shares of Apple fell more than 5% in after-hours trade, wiping out $100 billion from its stock market value. A sharp decline in iPhone sales and a lack of forward guidance disappointed investors. The stock currently has a Zacks Rank #3 (Hold) and VGM Score of B. However, it belongs to a bottom-ranked Zacks industry (bottom 10%).
ETFs to Tap
Given this, investors could consider the following ETFs with the largest allocation to the tech titan. These funds have Apple as the top or second firm with a double-digit allocation and sport a Zacks Rank #1 (Strong Buy) with a Medium risk outlook.
Select Sector SPDR Technology ETF (XLK - Free Report)
This most-popular technology ETF has $33.8 billion in AUM and charges 13 bps in fees per year from its investors. AAPL makes up for roughly 23.9% of the assets (read: ETFs to Buy as Cloud Boosts Microsoft's Fiscal Q1 Results).
MSCI Information Technology Index ETF (FTEC - Free Report)
With AUM of $4.6 billion, the product allocates 21.9% in Apple. The ETF has 0.08% in expense ratio.
iShares Dow Jones US Technology ETF (IYW - Free Report)
This ETF provides investors exposure to technology stocks with a 20% allocation in Apple. The fund has AUM of $6.1 billion and charges 43 bps in fees and expenses.
Vanguard Information Technology ETF (VGT - Free Report)
This fund manages about $36.6 billion in its asset base with 21.9% allocation in Apple. It has 0.10% in expense ratio (see: all the Technology ETFs here).
Invesco QQQ (QQQ - Free Report)
This ETF provides exposure to the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization, and Apple accounts for 12% share. It has AUM of $135.6 billion and charges 20 bps in annual fees.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>