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Apple (AAPL) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research
Fair Isaac (FICO) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

In the latest trading session, Apple (AAPL) closed at $186.53, marking a -0.79% move from the previous day. This change lagged the S&P 500's 0.01% loss on the day. At the same time, the Dow lost 0.1%, and the tech-heavy Nasdaq gained 0.12%.

Prior to today's trading, shares of the maker of iPhones, iPads and other products had gained 10.33% over the past month. This has outpaced the Computer and Technology sector's gain of 4.57% and the S&P 500's gain of 2.24% in that time.

Investors will be hoping for strength from AAPL as it approaches its next earnings release. On that day, AAPL is projected to report earnings of $2.38 per share, which would represent a year-over-year decline of 12.82%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $57.60 billion, down 5.79% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $11.38 per share and revenue of $254.49 billion. These totals would mark changes of -4.45% and -4.18%, respectively, from last year.

Any recent changes to analyst estimates for AAPL should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.07% lower. AAPL is currently sporting a Zacks Rank of #3 (Hold).

Digging into valuation, AAPL currently has a Forward P/E ratio of 16.52. This valuation marks a discount compared to its industry's average Forward P/E of 17.44.

Also, we should mention that AAPL has a PEG ratio of 1.93. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Computer - Mini computers industry currently had an average PEG ratio of 2.47 as of yesterday's close.

The Computer - Mini computers industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 50, putting it in the top 20% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow AAPL in the coming trading sessions, be sure to utilize Zacks.com.


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