U.S. markets closed

Apple (AAPL) Gains But Lags Market: What You Should Know

Zacks Equity Research

In the latest trading session, Apple (AAPL) closed at $338.80, marking a +0.86% move from the previous day. The stock lagged the S&P 500's daily gain of 1.31%. Meanwhile, the Dow gained 1.9%, and the Nasdaq, a tech-heavy index, added 1.01%.

AAPL will be looking to display strength as it nears its next earnings release. In that report, analysts expect AAPL to post earnings of $1.96 per share. This would mark a year-over-year decline of 10.09%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $51.06 billion, down 5.11% from the year-ago period.

AAPL's full-year Zacks Consensus Estimates are calling for earnings of $12.30 per share and revenue of $262.22 billion. These results would represent year-over-year changes of +3.45% and +0.79%, respectively.

Any recent changes to analyst estimates for AAPL should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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 past month, the Zacks Consensus EPS estimate has moved 0.08% lower. AAPL currently has a Zacks Rank of #3 (Hold).

In terms of valuation, AAPL is currently trading at a Forward P/E ratio of 27.32. Its industry sports an average Forward P/E of 7.6, so we one might conclude that AAPL is trading at a premium comparatively.

Also, we should mention that AAPL has a PEG ratio of 2.56. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Computer - Mini computers stocks are, on average, holding a PEG ratio of 2.56 based on yesterday's closing prices.

The Computer - Mini computers industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 91, putting it in the top 36% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Apple Inc. (AAPL) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research