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Apple did not provide revenue guidance for the second quarter of fiscal 2022, given the uncertainty around the impact of the coronavirus pandemic. The company expects to achieve solid year-over-year revenue growth and set a second-quarter revenue record despite significant supply constraints, which it estimates to be less than the December quarter.
However, Apple expects revenue growth rate to decelerate from the December quarter, primarily due to tough year-over-year comparisons and unfavorable forex.
The Zacks Consensus Estimate for revenues is currently pegged at $94.79 billion, indicating growth of 5.82% from the year-ago quarter’s reported figure.
The consensus mark for earnings is currently pegged at $1.43 per share, unchanged over the past 30 days and indicating 2.14% growth from the figure reported in the year-ago quarter.
Apple’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and was in line with the remaining one, the earnings surprise being 20.28%, on average.
Let’s see how things are shaping up for the upcoming announcement.
Strong iPhone 13 Demand to Drive Y/Y Sales Growth
Apple’s fortunes are heavily reliant on the iPhone, which is by far its biggest revenue contributor. The device accounted for 57.8% of net sales in the last-reported quarter, wherein sales increased 9.2% year over year to $71.63 billion.
Continued demand for the 5G-enabled iPhone 13 is expected to have driven the top line in the to-be-reported quarter. Per a latest Canalys report on worldwide smartphone shipments, Apple grabbed the #2 spot with 18% of market share in first-quarter 2022.
The Zacks Consensus Estimate for iPhone sales currently stand at $48.68 billion, indicating 1.2% growth from the year-ago quarter’s reported figure.
Services Momentum to Aid Q2 Top-Line Growth
The Services segment is riding on increasing popularity of the App Store. Apple currently has more than 785 million paid subscribers across its Services portfolio. App Store continues to grab the attention of prominent developers from around the world, helping the company offer exciting new apps that drive traffic.
Services like Apple TV+, Apple Arcade, Apple News+, Apple Card, Apple Fitness+ and Apple One bundle are expected to have contributed to overall growth.
Apple TV+ is gaining recognition, with Ted Lasso winning multiple Emmy Awards and, most recently, CODA winning three Academy Awards.
During the to-be-reported quarter, Apple TV+ gained the rights to stream weekly Major League Baseball games, including two Friday night games.
Apple expects Services’ growth rate to decline as compared with the first quarter of fiscal 2022. Markedly, in the previous quarter, Services revenues grew 23.8% from the year-ago quarter to $19.52 billion and accounted for 15.7% of sales.
Wearables’ Growth to Remain Strong
Apple is dominating the wearables market, thanks to strong adoption of Apple Watch. The company’s Fitness+ subscription service, built on Apple Watch, is a game changer. Fitness+ tracks health- and workout-related data from Apple Watch that users can view on their iPhones, iPads or Apple TVs.
The addition of healthcare features has been a game-changer for Apple Watch. The Series 7 model offers Blood Oxygen app, ECG app, high and low heart rate notifications, irregular heart rhythm notification and fall detection.
Apple Watch’s adoption rate continues to grow rapidly. More than two-thirds of the customers who purchased Apple Watch during first-quarter fiscal 2022 were first-time customers.
During the to-be-reported quarter, Apple released watchOS 8.5 to all Watch users, starting with the Series 3 models. The latest update adds 37 new emojis and offers a new, non-binary Siri voice for American users.
Apple Watch users can now authorize Apple TV purchases and subscriptions, a feature provided by the latest watchOS 8.5 update.
Apple is offering updates to irregular rhythm notifications designed to improve atrial fibrillation identification. This feature is available in the United States, Chile, Hong Kong, South Africa and many other regions.
What Our Model Says
Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Apple has an Earnings ESP of -0.77% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are a few companies worth considering, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:
Camtek shares have underperformed the Zacks Computer & Technology sector year to date. CAMT shares are down 31.1% compared with sector’s decline of 21.7%. The company is set to report first-quarter 2022 on May 12, 2022.
CDW (CDW - Free Report) has an Earnings ESP of +0.17% and carries a Zacks Rank of 2, at present.
CDW shares are down 16.6% year to date. The company is set to report first-quarter 2022 results on May 4.
Fabrinet (FN - Free Report) has an Earnings ESP of +0.87% and a Zacks Rank #2.
Fabrinet shares are down 16% year to date. FN is set to report third-quarter fiscal 2022 results on May 2.
Image: Bigstock
Apple (AAPL) to Report Q2 Earnings: What's in the Offing?
Apple (AAPL - Free Report) is set to report second-quarter fiscal 2022 results on Apr 28.
Apple did not provide revenue guidance for the second quarter of fiscal 2022, given the uncertainty around the impact of the coronavirus pandemic. The company expects to achieve solid year-over-year revenue growth and set a second-quarter revenue record despite significant supply constraints, which it estimates to be less than the December quarter.
However, Apple expects revenue growth rate to decelerate from the December quarter, primarily due to tough year-over-year comparisons and unfavorable forex.
The Zacks Consensus Estimate for revenues is currently pegged at $94.79 billion, indicating growth of 5.82% from the year-ago quarter’s reported figure.
The consensus mark for earnings is currently pegged at $1.43 per share, unchanged over the past 30 days and indicating 2.14% growth from the figure reported in the year-ago quarter.
Apple’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and was in line with the remaining one, the earnings surprise being 20.28%, on average.
Apple Inc. Price and EPS Surprise
Apple Inc. price-eps-surprise | Apple Inc. Quote
Let’s see how things are shaping up for the upcoming announcement.
Strong iPhone 13 Demand to Drive Y/Y Sales Growth
Apple’s fortunes are heavily reliant on the iPhone, which is by far its biggest revenue contributor. The device accounted for 57.8% of net sales in the last-reported quarter, wherein sales increased 9.2% year over year to $71.63 billion.
Continued demand for the 5G-enabled iPhone 13 is expected to have driven the top line in the to-be-reported quarter. Per a latest Canalys report on worldwide smartphone shipments, Apple grabbed the #2 spot with 18% of market share in first-quarter 2022.
The Zacks Consensus Estimate for iPhone sales currently stand at $48.68 billion, indicating 1.2% growth from the year-ago quarter’s reported figure.
Services Momentum to Aid Q2 Top-Line Growth
The Services segment is riding on increasing popularity of the App Store. Apple currently has more than 785 million paid subscribers across its Services portfolio. App Store continues to grab the attention of prominent developers from around the world, helping the company offer exciting new apps that drive traffic.
Services like Apple TV+, Apple Arcade, Apple News+, Apple Card, Apple Fitness+ and Apple One bundle are expected to have contributed to overall growth.
Apple TV+ is gaining recognition, with Ted Lasso winning multiple Emmy Awards and, most recently, CODA winning three Academy Awards.
During the to-be-reported quarter, Apple TV+ gained the rights to stream weekly Major League Baseball games, including two Friday night games.
Apple expects Services’ growth rate to decline as compared with the first quarter of fiscal 2022. Markedly, in the previous quarter, Services revenues grew 23.8% from the year-ago quarter to $19.52 billion and accounted for 15.7% of sales.
Wearables’ Growth to Remain Strong
Apple is dominating the wearables market, thanks to strong adoption of Apple Watch. The company’s Fitness+ subscription service, built on Apple Watch, is a game changer. Fitness+ tracks health- and workout-related data from Apple Watch that users can view on their iPhones, iPads or Apple TVs.
The addition of healthcare features has been a game-changer for Apple Watch. The Series 7 model offers Blood Oxygen app, ECG app, high and low heart rate notifications, irregular heart rhythm notification and fall detection.
Apple Watch’s adoption rate continues to grow rapidly. More than two-thirds of the customers who purchased Apple Watch during first-quarter fiscal 2022 were first-time customers.
During the to-be-reported quarter, Apple released watchOS 8.5 to all Watch users, starting with the Series 3 models. The latest update adds 37 new emojis and offers a new, non-binary Siri voice for American users.
Apple Watch users can now authorize Apple TV purchases and subscriptions, a feature provided by the latest watchOS 8.5 update.
Apple is offering updates to irregular rhythm notifications designed to improve atrial fibrillation identification. This feature is available in the United States, Chile, Hong Kong, South Africa and many other regions.
What Our Model Says
Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Apple has an Earnings ESP of -0.77% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are a few companies worth considering, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:
Camtek (CAMT - Free Report) has an Earnings ESP of +1.73% and is Zacks #2 Ranked. You can see the complete list of today’s Zacks #1 Rank stocks here.
Camtek shares have underperformed the Zacks Computer & Technology sector year to date. CAMT shares are down 31.1% compared with sector’s decline of 21.7%. The company is set to report first-quarter 2022 on May 12, 2022.
CDW (CDW - Free Report) has an Earnings ESP of +0.17% and carries a Zacks Rank of 2, at present.
CDW shares are down 16.6% year to date. The company is set to report first-quarter 2022 results on May 4.
Fabrinet (FN - Free Report) has an Earnings ESP of +0.87% and a Zacks Rank #2.
Fabrinet shares are down 16% year to date. FN is set to report third-quarter fiscal 2022 results on May 2.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.