AAPL Earnings Report

Summary

• Apple Inc. (AAPL) Earnings Report
• Apple, Inc.’s Enormous Fiscal 2015 in 8 Wild Facts
• IKF is bullish on Apple stock

Apple Inc. (Apple) designs, manufactures and markets mobile communication and media devices, personal computers, and portable digital music players, and a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications. The Company’s products and services include iPhone, iPad, Mac, iPod, Apple TV, a portfolio of consumer and professional software applications, the iOS and OS X operating systems, iCloud, and a variety of accessory, service and support offerings. The Company also delivers digital content and applications through the iTunes Store, App StoreSM, iBookstoreSM, and Mac App Store.

Apple Inc. (AAPL) Q1 2016 Misses On iPhone Sales, Revenue, But Sets $18.4 Billion Profit Record

(Source: Google Finance)

On January 26^th Apple released their earnings report. Even the giant tech company could not avoid the slowing of the smartphone market. Even though they set a new all-time quarterly profit record for any U.S. public company they failed to meet the sales expectations of the iPhone 6S, also other important products such as the iPad and Mac.

They posted earnings of $18.4 billion (profits) and $75.9 billion in revenue. This is a growth of 2% compared to last year. They beat the expectations in profit but failed in revenue, according to an analysts’ poll by Thomson Reuters. This compares to the $18 billion profit on $74.6 billion in revenue made during the same period last year.

The company had quarterly earnings of $3.28 per share on $75.9 billion in revenue. Analysts expected them to report earnings of about $3.23 a share on $76.54 billion in revenue, according to a consensus estimate from Thomson Reuters.

“Our record sales and strong margins drove all-time records for net income and EPS in spite of a very difficult macroeconomic environment,” Luca Maestri, Apple’s CFO, said in the company’s earnings release.

Apple and investors need to worry about the sales numbers. iPhone sales were mostly flat last year; the first time sales have not grown since the first iPhone was released in 2007. Apple sold 74.78 million iPhone units during the holiday quarter, compared to the 74.5 million during the same period last year.

As expected, Apple CEO Tim Cook focused on the positive: “Our team delivered Apple’s biggest quarter ever, thanks to the world’s most innovative products and all-time record sales of iPhone, Apple Watch, and Apple TV,” Cook said in a statement. “The growth of our services business accelerated during the quarter to produce record results, and our installed base recently crossed a major milestone of 1 billion active devices.”

But despite their worries, China continues to be a big weight of the revenue. The country accounts for $18.4 billion in revenue. This number is up 14% from last year.

Apple has announced that they are officially launching Apple Pay, their mobile payment system. In a December 18^th press release Apple explained: “China is an extremely important market for Apple and with China Union Pay and support from 15 of China’s leading banks, users will soon have a convenient, private and secure payment experience.” The Announcement also mentioned that Apple would partner with 15 Chinese banks to use the service. According to research by Piper Jaffray, Apple Pay has created revenues of $118 million so far. Nomura estimates revenues from the service to reach $1.6 billion by 2017, evidence of the potential for Apple’s mobile payment system to show explosive growth.

Apple is looking into new ways of making revenue. Some options are streaming live television service and an electric car. None of them are expected to come out soon. For now, analysts and investors are looking closely at Apple’s next smartphone, the iPhone 7, which is expected to come out during the second half of 2016.

Even though Wall Street has some hesitations about the company, analysts still see their stock as highly undervalued and have set their price targets. RBC Capital’s has set a target of $130 and Piper Jaffray’s $179. Their evaluation is based on the expectations of the new iPhone 7. But before that happens, Apple is also expected to launch a 4-inch iPhone in March, which may be called the iPhone 5se.

Mac sales have declined, with only 5.3 million units sold, down 4 percent last year. Despite the launch of a 12.9-inch iPad Pro in November, the iPad is still declining. It is down 25 percent from 21.42 million units sold in the same period last year.

Apple’s fiscal 2016 second-quarter is expected to have revenues between $50 billion and $53 billion, and gross margins between 39 and 39.5 percent. The expectations are quarterly revenues of $58 billion. The next dividend of 52 cents a share will be paid on Feb. 11 to shareholders on record as of closing on Feb. 8.

Apple, Inc.’s Enormous Fiscal 2015 in 8 Wild Facts from Fool.com

Before we look ahead to 2016, let us look back at the incredible year Apple had in 2015:

Apple’s revenue increased by $51 billion in a year: In Apple’s Q4 earnings report, the company provided some amazing numbers: “Our growth in one year was greater than the full year revenue of almost 90% of the companies in the Fortune 500.”

The total revenue was $234 billion yearly: This is very impressive, especially if we compare it to Alphabet and Facebook. Apple’s revenue was more than three times Alphabet’s and more than 14 times Facebook’s total revenue.

Revenue growth in developing markets increased 63%: This was an important part of the company’s growth in 2015 and was an important 34% of Apple’s total revenue.

Apple has cash totals of $205.7 billion: They had an incredible amount of cash for more repurchases, dividends, investments, and acquisitions.

Free cash flow was $70 billion: This annual free cash flow is how Apple gets away with an unprecedented share repurchase program, a growing dividend, and huge war chest of cash all at the same time.

iPhone sales rose by 37% between fiscal 2014 and 2015: In units sold, this is an increase from 169 million in 2014 to 231 million in 2015.

 Net Income grew by $53 billion and EPS by 43%: Even though they are the most valuable company in the world, they still grow at fast rates.

Apple spent $36 billion repurchasing its own shares during the year: The total Apple’s spent on repurchases since they started this project in 2012 to $104 billion.

Forecast

I Know First supplies financial services, mainly through stock forecasts via their predictive algorithm. The algorithm incorporates a 15-year database and utilizes it to predict the flow of money across 7,000 assets. The self-learning algorithm uses artificial intelligence, predictive models based on artificial neural networks, and genetic algorithms to predict money movements within various markets.

I Know First is bullish about this stock for the long term. The three-month and one-year forecasts for AAPL are included. AAPL for the 3 Month periods has a signal of 26.44 and predictability of 0.27 and for the 1 Year period has a signal of 164.21 and a higher predictability of 0.3.

Previously, I Know First’s Algorithm predicted the performance of AAPL for the period of October 11th to the 11^th of January. Since this article the stock fell by 12.12% during this 3-month time horizon.

Conclusion

If we look at the international market Apple has a lot of opportunities even in places like Russia that have been hit hard by the collapse in the price of oil. In fact, “this is exactly the period that you want to invest” around the globe, Cook said, later pointing to the company’s efforts in India and China.

The company is still very strong as we can see from the earnings report despite their sales decline. It was revealed that the company saw a record number of people who switch from Android to iPhone in the quarter. They had their best quarter so far for their TV platform They also had record sales for the Apple Watch sales and an increasing number of Apple Pay users.

As we can see from this data Apple still has a bright future with new markets and products to bring to the table.