Shares of Apple (
AAPL Quick Quote AAPL - Free Report) have been strong performers lately, with the stock up 14.6% over the past month. The stock hit a new 52-week high of $149.57 in the previous session. Apple has gained 12.4% since the start of the year compared to the 21% move for the Zacks Computer and Technology sector and the 13.7% return for the Zacks Computer - Mini computers industry. What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on April 28, 2021, Apple reported EPS of $1.4 versus consensus estimate of $1 while it beat the consensus revenue estimate by 15.41%.
For the current fiscal year, Apple is expected to post earnings of $5.19 per share on $356.51 billion in revenues. This represents a 58.23% change in EPS on a 29.87% change in revenues. For the next fiscal year, the company is expected to earn $5.36 per share on $372.87 billion in revenues. This represents a year-over-year change of 3.29% and 4.59%, respectively.
Apple may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Apple has a Value Score of D. The stock's Growth and Momentum Scores are B and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 28.8X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 37X versus its peer group's average of 9.8X. Additionally, the stock has a PEG ratio of 2.27. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Apple currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Apple fits the bill. Thus, it seems as though Apple shares could still be poised for more gains ahead.
How Does Apple Stack Up to the Competition?
Shares of Apple have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also solid potential picks, including Lenovo Group (
LNVGY Quick Quote LNVGY - Free Report) , Ricoh ( RICOY Quick Quote RICOY - Free Report) , and Canon ( CAJ Quick Quote CAJ - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 12% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Apple, even beyond its own solid fundamental situation.