Momentum Stock: Apple, Inc.

Apple, Inc. (AAPL) just reported another awesome quarter that produced a solid 14% earnings surprise as the iPhone and iPad supercharge the company’s bottom line. Estimates are once again on the upswing for this Zacks #1 rank stock that many analysts are calling the best company in the world.

Company Description

Apple, Inc. designs and sells various technology and consumer goods all across the world. The company was founded in 1976 and has a market cap of $235 billion.

There are few companies in the history of the modern economy that have been on the kind of roll Apple has been on over the last few years, recently eclipsing Microsoft in market cap as the second largest company in the world. We got on update on Apple’s business on July 2o when the company reported another awesome quarter that easily beat expectations.

Second-Quarter Results

Revenue for the period was up 61% from last year to $15.7 billion. Earnings also came in strong at $3.51, 14% ahead of the Zacks Consensus Estimate. The company’s average earnings surprise over the last four quarters now stands at an impressive 39%.

The key drivers for the quarter were the release of its new iPhone, the iPhone 4, and the launch of this highly anticipated iPad, with sales coming in at 3.3 million units in the first three months. Although the iPhone 4 was only sold on the last three days of the quarter, the company booked 1.7 million units for an excellent start to the sales cycle.

There had been some concern amongst analysts about the possibility of the iPad cannibalizing Mac sales, but that concern looks muted for the time being as Mac sales jumped 33% during the quarter.

A Ridiculous Cash Position

Apple also exited the quarter with an unbelievable cash position of $45 billion, leaving many analysts wondering what the company will do with its massive stock pile.

Estimates On the Move

Overall, it was another awesome quarter, and we have already begun to see that show up in estimates, with the current year up 6 cents in the last few days to $13.86. The next-year estimate is up 12 cents in the same time to $16.43, a bullish 19% growth projection.


Although you wouldn’t be crazy to say that Apple has no peers, its forward P/E of 18X is in line with its peer group.

2-Year Chart

Apple has been screaming higher for the last 15 months after bottoming out with the market in March of 2009. More recently, shares jumped higher on the solid earnings surprise to break a recent string of weakness after shares topped off above $279 in late June. Take a look at the chart below.

APPLE INC (AAPL): Free Stock Analysis Report
Zacks Investment Research

About Michael Vodicka 49 Articles

Affiliation: Zacks Investment Research

Visit: Zacks Investment Research

Be the first to comment

Leave a Reply

Your email address will not be published.