apple (AAPL – Free Report) is one of the most searched stocks on Zacks.com these days. So it's worth looking at some facts that could shape the stock's performance in the short term.
Shares of the maker of iPhones, iPads and other products have lost -5.1% over the past month versus the Zacks S&P 500 Composite Index's +3.7%. The Zacks Computer-Mini Computer industry, which Apple belongs to, has decreased by 5.4% in this period. The key question here is where the stock is likely to go in the short term.
While media reports and rumors about significant changes in a company's business outlook typically trigger stock price trends and lead to immediate price movements, there are always certain fundamental factors that ultimately drive the buy-and-hold decision. Exists.
Regarding revisions to performance forecasts
Zacks prioritizes evaluating changes in a company's future earnings expectations above all else. That's because we believe that the present value of future income streams determines the fair value of a stock.
Essentially, we study how the sell-side analysts covering a stock are revising their earnings estimates to reflect the impact of the latest business trends. And as a company's earnings expectations rise, so will the fair value of its stock. If the fair value is higher than the current market price, investors will be more willing to buy the stock, causing the price to rise. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
For the current quarter, Apple is expected to post earnings of $1.50 per share, representing a 1.3% decline from the year-ago period. The Zacks Consensus Estimate has changed -0.2% over the past 30 days.
The consensus earnings estimate for the current fiscal year of $6.55 represents a +6.9% change from the prior year. This estimate has remained unchanged over the past 30 days.
Next year's consensus revenue estimate of $7.11 represents a +8.6% change from the revenue Apple was expected to report a year ago. Estimates have not changed over the past month.
The Zacks Rank, a proprietary stock evaluation tool with an impressive, outside-audited track record of impressive results, harnesses the power of earnings estimate revisions to be a more conclusive indicator of a stock's short-term price performance. . The magnitude of the recent consensus estimate change, along with three other factors related to the earnings estimate, has led to Apple's Zacks Rank #3 (Hold).
The chart below shows the company's consensus EPS estimate over the next 12 months over time.
12 months EPS
Revenue growth forecast
There's no question that a company's profit growth is the best indicator of its financial health, but nothing will happen if it doesn't make a profit. It's nearly impossible for a company to expand its bottom line without growing it over the long term. Therefore, it's important to know a company's earnings growth potential.
For Apple, the consensus revenue estimate for the current quarter is $90.38 Billion, representing a year-over-year change of -4.7%. Estimates for the current and next fiscal year are $385.52 billion and $404.96 billion, representing changes of +0.6% and +5%, respectively.
Last reported results and surprising details
Apple reported revenue of $119.58 billion in its last reported quarter. This corresponds to a +2.1% year-on-year change. EPS for the same period was $2.18, compared to $1.88 a year ago.
The reported earnings represent a surprise of +1.66% when compared to the Zacks Consensus Estimate of $117.62 billion. EPS surprise was +4.31%.
The company beat consensus EPS estimates in each of the trailing four quarters. The company beat consensus revenue estimates every time during the period.
evaluation
You cannot make efficient investment decisions without considering stock valuation. Whether a stock's current price accurately reflects the intrinsic value of the underlying business and the company's growth prospects is a key determinant of future stock performance.
The present value of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), and the past value of your company Comparing a company to its peers based on these parameters can help you see if it is overvalued, overvalued or undervalued, but how reasonable its stock is You can get to know better.
The Zacks Value Style Score (part of the Zacks Style Scores system) pays close attention to both traditional and non-traditional valuation metrics and rates stocks from A to F, where A is better than B. , B is better than C, A is better than B, and B is better than C). ), can be very helpful in identifying whether a stock is overvalued, properly valued, or temporarily undervalued.
Apple is rated D on this score, indicating that it trades at a premium compared to its industry peers. Click here to see the values of some of the metrics that determined this grade.
conclusion
The facts discussed here, and much of the other information on Zacks.com, may help you decide whether the market buzz about Apple is worth paying attention to. However, the company's Zacks Rank #3 suggests it could outperform the broader market in the near term.
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