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Apple ETFs in the Spotlight Ahead of Fiscal Q4 Earnings

Sweta Killa

Technology giant Apple AAPL is set to release fourth-quarter fiscal 2019 results on Oct 30 after market close. Since Apple accounts for more than 19% of total market capitalization of the entire technology sector in the S&P 500 Index, it is worth taking a look at its fundamentals ahead of its quarterly results.

Apple has returned about 19% over the past three months, slightly outperforming the industry’s gain of 17%. The momentum may continue if the company beats estimates in the soon-to-be reported quarter (read: Can Q3 Earnings Bring Back the Allure for FAANG ETFs?).



Inside Our Methodology

Apple has a Zacks Rank #3 (Hold) and an Earnings ESP of +0.04%. According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Apple saw positive earnings estimate revision of a penny over the past seven days for the fiscal fourth quarter. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a pretty good indicator for the stock. Additionally, the company has a strong track record of positive earnings surprise. It delivered an average positive earnings surprise of 3.04% in the trailing four quarters.

However, the Zacks Consensus Estimate indicates a modest year-over-year decline of 2.41% for earnings and 0.34% for revenues.
 

Apple Inc. Price, Consensus and EPS Surprise

Apple Inc. Price, Consensus and EPS Surprise

Apple Inc. price-consensus-eps-surprise-chart | Apple Inc. Quote


Though AAPL has a solid Momentum Score of A, it has Value and Growth Score of C each. The stock belongs to a top-ranked Zacks Industry (top 41%). According to the analysts polled by Zacks, nearly 62% of the analysts provided a Strong Buy or a Buy rating for Apple ahead of its earnings (read: Should You Buy Apple ETFs Ahead of the Holiday Season?).

What’s Hot?

After years of high pricing, the gadget maker is now focusing on lower pricing strategy in order to lure customers as it is struggling with declining iPhone sales. Additionally, it is focusing on streaming services, software and original content to expand its business beyond iPhones.

Fiscal Q3 was the biggest quarter ever driven by all-time record revenues from services, accelerating growth from wearables, strong performance of iPad and Mac and significant improvement in iPhone trends.

At its September hardware event, Apple launched a set of new iPhones — iPhone 11, the iPhone 11 Pro, and the iPhone 11 Pro Max . The iPhone 11 starts at $699, while the 11 Pro and 11 Pro Max start at $999 and $1,099, respectively. The iPhone maker also announced the pricing for its new Apple TV+, which will be available from Nov 1. The TV streaming service will cost just $4.99 per month, much lower than the $9.99 monthly fee that some analysts had expected, and also cheaper than streaming services from Netflix Inc. NFLX and Walt Disney Co. DIS (read: Apple Unveils New Gadgets: ETFs in Focus).

ETFs in Focus

ETFs having the highest allocation to this tech titan will be in focus going into its earnings announcement. While there are several ETFs in the space with Apple in their top 10 holdings, we have highlighted the ones that have Apple as the top or the second firm with a double-digit allocation:

Select Sector SPDR Technology ETF XLK – The fund has AUM of $23 billion and has a Zacks ETF Rank #1 (Strong Buy). Apple makes up for 18.7% of the assets.

MSCI Information Technology Index ETF FTEC – This fund has a Zacks ETF Rank #1 and has AUM of $2.6 billion. Apple has 17.4% allocation.

Vanguard Information Technology ETF VGT – It has AUM of $22 billion and sports a Zacks ETF Rank #1. Here, AAPL takes 16.3% share (see: all the Technology ETFs here).

iShares Dow Jones US Technology ETF IYW – The fund has amassed $4.3 billion in its asset base and carries a Zacks ETF Rank #1. Apple accounts for 16.6% of the assets.

iShares Global Tech ETF IXN - The product has accumulated $2.9 billion in its asset base. Apple accounts for 14.8% allocation.

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