Zacks Equity Research
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Apple (AAPL) ended the recent trading session at $205.17, demonstrating a +2.03% change from the preceding day’s closing price. This change outpaced the S&P 500’s 0.52% gain on the day. On the other hand, the Dow registered a gain of 0.63%, and the technology-centric Nasdaq increased by 0.48%.
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Prior to today’s trading, shares of the maker of iPhones, iPads and other products had gained 0.11% lagged the Computer and Technology sector’s gain of 7.56% and the S&P 500’s gain of 4.27%.
The investment community will be closely monitoring the performance of Apple in its forthcoming earnings report. The company is expected to report EPS of $1.41, up 0.71% from the prior-year quarter. Meanwhile, the latest consensus estimate predicts the revenue to be $88.31 billion, indicating a 2.95% increase compared to the same quarter of the previous year.
In terms of the entire fiscal year, the Zacks Consensus Estimates predict earnings of $7.11 per share and a revenue of $404.19 billion, indicating changes of +5.33% and +3.36%, respectively, from the former year.
Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Apple. Such recent modifications usually signify the changing landscape of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the business outlook.
Based on our research, we believe these estimate revisions are directly related to near-term stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.
The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed an unchanged state. As of now, Apple holds a Zacks Rank of #3 (Hold).
With respect to valuation, Apple is currently being traded at a Forward P/E ratio of 28.27. For comparison, its industry has an average Forward P/E of 11.62, which means Apple is trading at a premium to the group.
It’s also important to note that AAPL currently trades at a PEG ratio of 2.25. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company’s expected earnings growth rate. The average PEG ratio for the Computer – Micro Computers industry stood at 1.53 at the close of the market yesterday.
