As earnings season continues to unfold, investors and traders eagerly await the quarterly results of tech giant Apple (AAPL). Despite a recent decline in share price, could a strong Q4 release turn things around for the company? Let’s dive into the expectations and key metrics to watch.
The Big Picture
Apple, one of the remaining “Big 7” companies yet to report, has been a driving force behind the market’s surge in 2023. However, its shares have seen a 13% drop since reaching a high in mid-July. Will the upcoming earnings release provide a much-needed boost?
Analysts’ expectations for Apple’s Q4 release remain largely unchanged. The Zacks Consensus EPS Estimate of $1.39 reflects a modest 0.6% increase since August and a solid 7.8% growth compared to the same period last year. On the other hand, the estimated quarterly revenue of $88.8 billion has seen a slight decrease of 1.1% and represents a pullback of 1.5% year-over-year.
One of the key focuses of the earnings release will undoubtedly be iPhone results. While the Zacks Consensus Estimate for iPhone revenue stands at $44.2 billion, representing a positive change of 3.8% from the previous year, Apple has struggled to surpass these expectations in recent quarters. However, the strong demand for the iPhone 15 Pro Max may provide a much-needed tailwind.
Apple’s Services portfolio, which includes revenues from cloud services, the App Store, Apple Music, Apple Pay, and more, has become a notable contributor to the company’s top line. With over 1 billion paid subscribers, Apple’s Services segment is expected to see accelerated growth in Q4. The Zacks Consensus Estimate for Services revenue is $21.4 billion, indicating an 11% climb from the previous year.
Another vital metric to watch is Apple’s Wearables segment, which includes the Apple Watch and AirPods. This segment has experienced solid growth in recent years and is expected to generate $9.3 billion in revenue for Q4, representing a slight decline of 3.1% compared to the same period last year.
An Investor’s Perspective
Apple shares currently trade at a forward 12-month earnings multiple of 25.5X, slightly above its five-year median. While the stock may seem to reside on the higher end, investors have been willing to pay a premium due to Apple’s strong position in the market. It’s important to note that the stock has a Value Style Score of “D.”
In conclusion, Apple’s Q4 release is a highly anticipated event that could potentially impact the market. With analysts expecting growth in earnings and accelerated growth in key segments like iPhone and Services, it will be interesting to see if Apple can exceed expectations and regain investor confidence.
Disclaimer: The views and opinions expressed in this article are solely those of the author and do not reflect the official policy or position of Nasdaq, Inc.