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Technology giant Apple (AAPL) is known for innovation in hardware, software and services. While the company is poised for solid growth in the long term, uncertain macroeconomic conditions are likely to hamper its financial performance in the short term. So let’s see if we should buy or hold this tech stock in June. read….
Technology giant Apple Inc. (AAPL) reported deteriorating financial conditions for the first quarter of fiscal 2023. In addition, the company is expected to continue to deal with macroeconomic headwinds such as declining consumer spending, persistently high inflation and growing recession fears.
The consumer electronics giant is well-positioned for significant long-term growth, fueled by innovative products and services, but uncertain macro conditions are expected to hamper sales this year. . Given AAPL’s poor financials, overvalued valuations, and bleak short-term outlook, it might be wise to wait for a better entry point for this stock.
With a market capitalization of $2.84 trillion, AAPL is a leading technology giant that designs, manufactures and markets smartphones, personal computers, tablets, wearables and accessories. Both performance and design are the main drivers of the brand and its continued success.
This month, AAPL unveiled Apple Vision Pro™, a revolutionary spatial computer that seamlessly blends digital content with the physical world while allowing users to be present and connect with others.
“Building on decades of Apple innovation, Vision Pro features a revolutionary new input system and thousands of breakthrough innovations,” said AAPL CEO Tim Cook. It’s years ahead and unlike anything ever made, which will unlock amazing experiences and exciting new opportunities for our users.” for our developers. ”
This first spatial computer marks the beginning of a new era in computing, driving revenue streams and growth for the company.
AAPL also introduced the new Mac Studio™ and Mac Pro®, two of the most powerful Macs ever made. Mac Studio features the M2 Max and the new M2 Ultra, delivering significantly improved performance and enhanced connectivity in a compact design. Plus, Mac Pro combines PCIe slots with the most powerful chips for those who want the versatility of internal expansion.
The launch of these new products should bode well for the company. Although the company continues to strive to introduce innovative and advanced products and services, high inflation and continued economic uncertainty are likely to weigh on its performance in the short term.
AAPL said sales in the first three months of 2023 fell 2.5% year-over-year to $94.84 billion as consumers curtailed spending on smartphones and computers amid growing fears of inflation and recession. Announced.The company’s earnings slightly beat Wall Street expectations, but this Two consecutive quarters of sales decline.
Gartner Data Shows Global PC Shipments down 30% year-on-year According to separate data from International Data Corporation (IDC), global smartphone shipments declined. 14.6% YoY It reached 268.6 million units in the first quarter.
Several analysts recently downgraded AAPL. DA Davidson analyst Tom Forte cuts stocks Buy to Neutral After the introduction of Apple Vision Pro. In addition, the target price was lowered from 193 to 185.
“We believe there are significant structural challenges for Apple in terms of consumer adoption of AR/VR hardware, which may limit the near-term impact on the company’s sales and profitability. Yes,” Forte said. Among those challenges, he said, is the high price of gadgets.
Additionally, Loop Capital analyst Ananda Barua downgraded AAPL shares. From purchase to hold There are signs of declining demand for iPhone handsets, threatening the company’s earnings in the June quarter.
AAPL’s stock has risen 4.5% over the past month and 22% over the past year to close at $180.57. In addition, the inventory is Ranked #7 on the Robinhood 100.
Here are some things that may impact AAPL performance in the coming months:
tight financial situation
In the second quarter ended April 1, 2023, AAPL’s net sales decreased 2.5% year-on-year to $94.84 billion. The company’s gross margin fell 1.4% year-on-year to $41.98 billion. Operating profit was $28.32 billion, down 5.5% year-on-year.
In addition, net profit fell 3.4% year-on-year to $24.16 billion. AAPL had liquid assets of $112.91 billion as of April 1, 2023 and $135.41 billion as of September 24, 2022.
Analyst Mixed Expectations
Analysts expect AAPL’s revenue for the fiscal year ending September 2023 to fall 2.4% year-over-year to $384.9 billion. The consensus forecast for earnings per share this quarter is $5.97, down 2.3% from last year.
However, the company’s revenue and EPS for fiscal 2024 are expected to grow 6.8% and 9.8% year-on-year to $410.89 billion and $6.56, respectively.
strong profitability
AAPL’s EBIT margin for the last 12 months was 29.16%, 576.9% above the industry average of 4.31%.12 months thereafter EBITDA margin 32.14% is 294.9% higher than the industry average of 8.14%. The company’s net profit margin for the last 12 months was 24.49%, 1,132.3% higher than the industry average of 1.99%.
In addition, AAPL’s ROCE and ROTA over the last 12 months are 145.61% and 39.09%, well above the industry average of 0.23% and 1.63% respectively.
highly rated
In terms of non-GAAP future P/E, AAPL is currently trading at 30.23x, 33.9% above the industry average of 22.58x. The company’s future EV/sales of 7.23x is 146.1% higher than the industry average of 2.94x. Additionally, the company’s future EV/EBITDA multiple is 22.29, 53.8% higher than the industry average of 14.49.
Additionally, the company’s estimated price/sales is 7.38x, 168.1% higher than the industry average of 2.75x. The company’s expected price/book multiple is 47.52, well above the industry average of 3.98.
POWR ratings reflect uncertainty
AAPL has an overall rating of C, which corresponds to our rating of Neutral. power rating system. The POWR rating is calculated by considering 118 different factors, with each factor being optimally weighted.
Our proprietary rating system also evaluates each stock based on eight different categories. AAPL has industry-leading profitability and an A grade for quality.
Additionally, the sentiment rating for the company’s stock is a C grade, consistent with its weak financial profile and expectations of various analysts. On the other hand, AAPL’s valuation is a D grade, which is consistent with its higher valuation compared to its peers.
AAPL ranks 19th out of 44 stocks. Technology – Hardware industry.
In addition to the above, we also award AAPL grades for Growth, Stability and Momentum. Get all POWR ratings for AAPL here.
Conclusion
Consumer electronics giant AAPL is widely recognized for innovation in hardware and software products and services. Recently, the company unveiled a revolutionary spatial computer, the Apple Vision Pro. Furthermore, in September last year, the third generation 5G smartphone “iPhone 14” series was announced. We also launched the Apple Watch Series 8 smartwatch and 2nd generation AirPods Pro earbuds.
Despite being organized for innovation, AAPL reported disappointing results in the first quarter of 2023. The company is well-positioned for significant long-term growth, but short-term performance may be impacted by weak consumer spending due to persistent inflation. and fear of recession.
Investors may be wise to wait for a better entry point into the tech stock, given AAPL’s tight financial situation, extremely high valuation, and weak near-term growth prospects.
Stocks to consider instead of Apple Inc. (AAPL)
Given the uncertain near-term outlook, AAPL’s chances of outperforming in the coming weeks and months are in jeopardy. However, there are many competitors with much better POWR ratings. So instead, consider the following three of his A-rated (strong buy) stocks in the tech/hardware industry.
Panasonic Holdings Co., Ltd. (PCRFY)
Canon Inc(CAJMore)
Ricoh Company, Ltd (Ricoy)
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AAPL shares were trading at $181.58 a share Friday morning, up $1.01 (+0.56%). Year-to-date, the AAPL is up 40.16%, while the benchmark S&P 500 index is up 12.94% over the same period.
About the Author: Mangeet Kaur Bounce
Mangeet’s keen interest in the stock market led him to become an investment researcher and financial journalist. Using a fundamental approach to analyzing stocks, Manguito seeks to help retail investors understand the underlying factors before making investment decisions.
post Apple (AAPL) Buy or Sell in June? first appeared in stocknews.com