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Apple Inc. (AAPL - Free Report) encouraged investors with robust second-quarter fiscal 2018 results, after the closing bell yesterday. The technology giant topped the earnings and revenue estimates and projected continued sales momentum, easing concerns about weak demand for iPhone that have put shares of AAPL under pressure in recent months.
Additionally, Apple beefed up its plan to return cash to its shareholders through dividend hikes and additional buybacks that will provide further support to its stock price.
Apple Q2 Results in Focus
Earnings per share came in at $2.73, beating the Zacks Consensus Estimate by four cents and improving 30% from the year-ago earnings. Revenues grew 16% year over year, the fastest growth in more than two years, to $61.1 billion and slightly edged past the estimate of $61 billion. The impressive results were driven primarily by a 14% increase in iPhone revenues and a 31% increase in revenues from the service unit, which includes App Store, AppleCare, Apple Pay and Apple Music.
Apple sold 52.2 million iPhones in the fiscal second quarter, up from 50.8 million units in the year-ago quarter but below our consensus estimate of 52.94 million units. Revenues of iPad and other products, such as Apple TV, Watch and AirPods, increased 6% and 38%, respectively, while Mac revenues growth was flat.
The gadget-maker foresees revenues in the range of $51.5-$53.5 billion for the third quarter of fiscal 2018. This is much above the current Zacks Consensus Estimate of $51.33 billion (see: all the Technology ETFs here).
The company encouraged investors with a big dividend boost and stock buybacks following the tax break that will bring overseas cash back to the United States. It announced an additional massive share buyback program to the tune of $100 million on top of the existing $210 billion to be completed during the fiscal third quarter, and boosted its quarterly dividend by 16% to 73 cents.
Market Impact
Following the results and big capital return program, the stock jumped more than 5% in aftermarket hours on elevated volumes.
Investors should note that Apple stock suffered correction (a decline of at least 10% for the recent peak) two times this year – one in early February and another in late April. Notably, the stock is down 0.1% so far this year. This indicates that this is the time for investors to snap up Apple shares and tap the value that the company has created over time. Though Apple currently carries a Zacks Rank #4 (Sell), it flaunts a solid Value Score of B (read: Why Value ETFs May Rule in Q2).
ETFs to Buy
Given this, investors seeking to tap the value of this tech titan could consider the following ETFs. These funds have Apple as their top firm with a double-digit allocation and a solid Zacks ETF Rank # 2 (Buy).
This ETF provides investors exposure to technology stocks with 16.1% allocation in Apple. The fund has AUM of $4 billion and charges 44 bps in fees and expenses. It has gained 4.8% so far this year.
This most popular technology ETF has $19.8 billion in AUM and charges 13 bps in fees per year from investors. AAPL makes up for roughly 14.1% of assets. It has added 4% in the same time frame (read: 5 Tech ETFs in Green Despite One-Month Turmoil).
With AUM of $1.8 billion, the product allocates 13% in Apple. The ETF has 0.08% in expense ratio and has gained 5.3%.
iShares Edge MSCI Multifactor Technology ETF
This ETF targets companies that have the potential to outperform the broad U.S. technology sector. Apple accounts for 12.7% of the portfolio. TCHF charges 35 bps in fees per year and has attracted $7.8 million in its asset base. It has added 2% in the same time frame.
This ETF provides exposure to the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization, with Apple making up for 11.1% share in the basket. It has $60 billion in AUM and charges 20 bps in fees per year. The fund is up 4.7% so far this year (read: Top-Performing ETF Areas of April).
This fund offers exposure to large and mid-cap U.S. stocks with lower valuations based on fundamentals and Apple accounting for 9.7% of assets. It manages about $3.3 billion in its asset base and has 0.15% in expense ratio. The fund has shed 0.9% in the same time frame.
With AUM of $3.5 billion, this product provides exposure to the largest growth stocks in the U.S. market with Apple making up for 8.6% of assets. It charges 7 bps in fees per year and has added 2.8% so far this year.
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ETFs to Buy Post Apple's Strong Q2 Result
Apple Inc. (AAPL - Free Report) encouraged investors with robust second-quarter fiscal 2018 results, after the closing bell yesterday. The technology giant topped the earnings and revenue estimates and projected continued sales momentum, easing concerns about weak demand for iPhone that have put shares of AAPL under pressure in recent months.
Additionally, Apple beefed up its plan to return cash to its shareholders through dividend hikes and additional buybacks that will provide further support to its stock price.
Apple Q2 Results in Focus
Earnings per share came in at $2.73, beating the Zacks Consensus Estimate by four cents and improving 30% from the year-ago earnings. Revenues grew 16% year over year, the fastest growth in more than two years, to $61.1 billion and slightly edged past the estimate of $61 billion. The impressive results were driven primarily by a 14% increase in iPhone revenues and a 31% increase in revenues from the service unit, which includes App Store, AppleCare, Apple Pay and Apple Music.
Apple sold 52.2 million iPhones in the fiscal second quarter, up from 50.8 million units in the year-ago quarter but below our consensus estimate of 52.94 million units. Revenues of iPad and other products, such as Apple TV, Watch and AirPods, increased 6% and 38%, respectively, while Mac revenues growth was flat.
The gadget-maker foresees revenues in the range of $51.5-$53.5 billion for the third quarter of fiscal 2018. This is much above the current Zacks Consensus Estimate of $51.33 billion (see: all the Technology ETFs here).
The company encouraged investors with a big dividend boost and stock buybacks following the tax break that will bring overseas cash back to the United States. It announced an additional massive share buyback program to the tune of $100 million on top of the existing $210 billion to be completed during the fiscal third quarter, and boosted its quarterly dividend by 16% to 73 cents.
Market Impact
Following the results and big capital return program, the stock jumped more than 5% in aftermarket hours on elevated volumes.
Investors should note that Apple stock suffered correction (a decline of at least 10% for the recent peak) two times this year – one in early February and another in late April. Notably, the stock is down 0.1% so far this year. This indicates that this is the time for investors to snap up Apple shares and tap the value that the company has created over time. Though Apple currently carries a Zacks Rank #4 (Sell), it flaunts a solid Value Score of B (read: Why Value ETFs May Rule in Q2).
ETFs to Buy
Given this, investors seeking to tap the value of this tech titan could consider the following ETFs. These funds have Apple as their top firm with a double-digit allocation and a solid Zacks ETF Rank # 2 (Buy).
iShares Dow Jones US Technology ETF (IYW - Free Report)
This ETF provides investors exposure to technology stocks with 16.1% allocation in Apple. The fund has AUM of $4 billion and charges 44 bps in fees and expenses. It has gained 4.8% so far this year.
Select Sector SPDR Technology ETF (XLK - Free Report)
This most popular technology ETF has $19.8 billion in AUM and charges 13 bps in fees per year from investors. AAPL makes up for roughly 14.1% of assets. It has added 4% in the same time frame (read: 5 Tech ETFs in Green Despite One-Month Turmoil).
MSCI Information Technology Index ETF (FTEC - Free Report)
With AUM of $1.8 billion, the product allocates 13% in Apple. The ETF has 0.08% in expense ratio and has gained 5.3%.
iShares Edge MSCI Multifactor Technology ETF
This ETF targets companies that have the potential to outperform the broad U.S. technology sector. Apple accounts for 12.7% of the portfolio. TCHF charges 35 bps in fees per year and has attracted $7.8 million in its asset base. It has added 2% in the same time frame.
PowerShares 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, with Apple making up for 11.1% share in the basket. It has $60 billion in AUM and charges 20 bps in fees per year. The fund is up 4.7% so far this year (read: Top-Performing ETF Areas of April).
iShares Edge MSCI USA Value Factor ETF (VLUE - Free Report)
This fund offers exposure to large and mid-cap U.S. stocks with lower valuations based on fundamentals and Apple accounting for 9.7% of assets. It manages about $3.3 billion in its asset base and has 0.15% in expense ratio. The fund has shed 0.9% in the same time frame.
Vanguard Mega Cap Growth ETF (MGK - Free Report)
With AUM of $3.5 billion, this product provides exposure to the largest growth stocks in the U.S. market with Apple making up for 8.6% of assets. It charges 7 bps in fees per year and has added 2.8% so far this year.
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 >>