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Apple Earnings Preview: How Will the Coronavirus Impact iPhone Sales?
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Apple (AAPL - Free Report) was one of the first Wall Street giants to warn that the coronavirus was set to impact its sales, back on February 17. The iPhone maker’s near-term issues have grown far worse since then, after the virus turned into a global pandemic.
So let’s see what investors should expect from Apple’s Q2 fiscal 2020 financial results that are due out after the closing bell on Thursday, April 30.
Quick Earnings Outlook
Amazon (AMZN - Free Report) , Microsoft (MSFT - Free Report) , Facebook , and a ton of other big names join Apple this week, in what could prove to be a pivotal test of the market’s surge from its March 23 lows. Meanwhile, governments are deciding how to start reopening their economies as they deal with the coronavirus.
Investors should note that overall S&P 500 earnings are projected to fall 15.3% in Q1 and 31.5% in the second quarter, based on our Zacks estimates. However, some sectors are set to take far larger hits amid the economic downturn, such as energy and transportation. And tech sector S&P 500 earnings are expected to dip just 0.7% in the first quarter (also read: Previewing Tech Sector Earnings).
Q2 & Near-Term Outlook
Apple has helped drive the market for years and it will likely continue to be a safe longer-term investment, given its cash holdings, diverse portfolio, strong management team, and more. That said, the coronavirus looks set to hurt its near-term growth prospects.
AAPL in a February 17 statement said it didn’t expect to meet its previously announced revenue guidance, citing production and demand setbacks in China. The company has slowly tried to get back to something close to normal operations in the world’s second-largest economy, but its stores remained close throughout the U.S. and most other markets. And the Wall Street Journal on Monday reported that Apple was “pushing back the production ramp-up of its flagship iPhones coming later this year by about a month.”
Our current Zacks estimates call for Apple’s Q2 fiscal 2020 sales to sink 7.9% from the year-ago period to $53.44 billion. This estimate comes in 20% below the high-end of its initial guidance that called for between $63 to $67 billion in second quarter revenue. And AAPL’s Q2 estimate comes up against the year-ago period’s 5% decline in revenue to help highlight the projected decline.
Wall Street will also pay close attention to Apple’s iPhone sales, which still accounted for approximately 55% of 2019 revenue even though the company has expanded its portfolio. AAPL’s flagship smartphone revenue is projected to tumble roughly 16.5% in Q2, based on our Key Company Metrics. Luckily, its growing wearables and services units are expected to climb by 16% and 13%, respectively.
Peeking further ahead, Apple’s Q3 sales are expected to fall 7.1% to help push its full-year fiscal 2020 sales down by 1.3%. This would mark its second-straight year of declining sales after FY19 dipped 2% below a hard-to-compare 2018. But it is important to remember that Apple is still projected to pull in $256.67 billion in 2020 revenue.
Bottom Line
At the bottom end of the income statement, Apple’s adjusted Q2 EPS is projected to fall 15.5% to $2.08 a share. This expected downturn looks even worse considering that Apple’s adjusted EPS also dipped 10% in the second quarter of fiscal 2019. The nearby chart also shows how far AAPL’s earnings estimates have fallen recently.
AAPL’s third-quarter earnings are then expected to sink 11.5%. But as of now, the tech powerhouse is projected to see its adjusted full-year fiscal 2020 earnings pop 1.3%, and it boasts a strong history of quarterly earnings beats.
Apple stock closed regular trading Tuesday 15% below its 52-week highs at $278.58 a share. And there will likely be a lot of pressure on AAPL shares Thursday afternoon, given its nearly 30% climb from its March 23 lows. Interested investors should pay close attention to its guidance and any coronavirus-focused updates.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Apple Earnings Preview: How Will the Coronavirus Impact iPhone Sales?
Apple (AAPL - Free Report) was one of the first Wall Street giants to warn that the coronavirus was set to impact its sales, back on February 17. The iPhone maker’s near-term issues have grown far worse since then, after the virus turned into a global pandemic.
So let’s see what investors should expect from Apple’s Q2 fiscal 2020 financial results that are due out after the closing bell on Thursday, April 30.
Quick Earnings Outlook
Amazon (AMZN - Free Report) , Microsoft (MSFT - Free Report) , Facebook , and a ton of other big names join Apple this week, in what could prove to be a pivotal test of the market’s surge from its March 23 lows. Meanwhile, governments are deciding how to start reopening their economies as they deal with the coronavirus.
Investors should note that overall S&P 500 earnings are projected to fall 15.3% in Q1 and 31.5% in the second quarter, based on our Zacks estimates. However, some sectors are set to take far larger hits amid the economic downturn, such as energy and transportation. And tech sector S&P 500 earnings are expected to dip just 0.7% in the first quarter (also read: Previewing Tech Sector Earnings).
Q2 & Near-Term Outlook
Apple has helped drive the market for years and it will likely continue to be a safe longer-term investment, given its cash holdings, diverse portfolio, strong management team, and more. That said, the coronavirus looks set to hurt its near-term growth prospects.
AAPL in a February 17 statement said it didn’t expect to meet its previously announced revenue guidance, citing production and demand setbacks in China. The company has slowly tried to get back to something close to normal operations in the world’s second-largest economy, but its stores remained close throughout the U.S. and most other markets. And the Wall Street Journal on Monday reported that Apple was “pushing back the production ramp-up of its flagship iPhones coming later this year by about a month.”
Our current Zacks estimates call for Apple’s Q2 fiscal 2020 sales to sink 7.9% from the year-ago period to $53.44 billion. This estimate comes in 20% below the high-end of its initial guidance that called for between $63 to $67 billion in second quarter revenue. And AAPL’s Q2 estimate comes up against the year-ago period’s 5% decline in revenue to help highlight the projected decline.
Wall Street will also pay close attention to Apple’s iPhone sales, which still accounted for approximately 55% of 2019 revenue even though the company has expanded its portfolio. AAPL’s flagship smartphone revenue is projected to tumble roughly 16.5% in Q2, based on our Key Company Metrics. Luckily, its growing wearables and services units are expected to climb by 16% and 13%, respectively.
Peeking further ahead, Apple’s Q3 sales are expected to fall 7.1% to help push its full-year fiscal 2020 sales down by 1.3%. This would mark its second-straight year of declining sales after FY19 dipped 2% below a hard-to-compare 2018. But it is important to remember that Apple is still projected to pull in $256.67 billion in 2020 revenue.
Bottom Line
At the bottom end of the income statement, Apple’s adjusted Q2 EPS is projected to fall 15.5% to $2.08 a share. This expected downturn looks even worse considering that Apple’s adjusted EPS also dipped 10% in the second quarter of fiscal 2019. The nearby chart also shows how far AAPL’s earnings estimates have fallen recently.
AAPL’s third-quarter earnings are then expected to sink 11.5%. But as of now, the tech powerhouse is projected to see its adjusted full-year fiscal 2020 earnings pop 1.3%, and it boasts a strong history of quarterly earnings beats.
Apple stock closed regular trading Tuesday 15% below its 52-week highs at $278.58 a share. And there will likely be a lot of pressure on AAPL shares Thursday afternoon, given its nearly 30% climb from its March 23 lows. Interested investors should pay close attention to its guidance and any coronavirus-focused updates.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>