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Slumping iPhone sales, increasing competition in China, an antitrust lawsuit by the U.S. Department of Justice, and fines in Europe for anti-competitive policies at its app store have weighed on Apple’s (AAPL) stock price. Should investors buy the stock now? Read on to find out my take.
iPhone maker Apple (AAPL) stock has fallen 11.7% since the beginning of the year. Investor sentiment has been hurt by concerns about weak Chinese demand, falling sales and increased competition. AAPL’s second-quarter earnings and revenue are also expected to be below consensus estimates.
In this article, we explained why it is wise to wait for a better entry point for a stock.
The Cupertino-based giant has faced several challenges recently, including slowing demand in China, one of its biggest markets. According to a report from Bloomberg, AAPL’s iPhone shipments in China have decreased by about ca. 33% in February 2024 Compared to last year. In China, it faces stiff competition from domestic brands such as Huawei and Xiaomi. AAPL is also struggling due to the slowdown in global smartphone demand.
Companies are also eligible antitrust litigation Filed by the U.S. Department of Justice. The lawsuit alleges that the iPhone maker is illegally exercising monopoly power over smartphones, driving out competitors, stifling innovation, and imposing extraordinary costs on developers, businesses, and consumers.
Loop Capital analyst Ananda Barua reiterated his “hold” rating on the stock, but lowered his price target. $185 to $170. Amid the dark clouds, investors will be looking forward to seeing what kind of innovations AAPL will bring in generative AI. CEO Tim Cook said the company is investing heavily in AI and breaking new ground. Generative AI will be released later this year.
Here’s what could impact AAPL’s performance in the coming months.
strong financials
AAPL’s net sales for the first quarter of the fiscal year ended December 30, 2023 were $119.58 billion, an increase of 2.1% from the same period last year. Gross profit margin increased 9% year over year to $54.86 billion. Net income increased 13.1% year-on-year to $33.92 billion. Additionally, EPS was $2.18, up 16% year-over-year. Additionally, cash generated by operating activities increased 17.3% year-on-year to $39.9 billion.
Analyst mixed forecast
Analysts expect AAPL’s fiscal 2024 EPS and revenue to be $6.57 billion and $388.32 billion, up 7.2% and 1.3% year over year, respectively. Fiscal 2025 EPS and sales are expected to be $7.16 billion and $412.54 billion, respectively, up 9% and 6.2% year over year.
EPS and revenue for the quarter ending March 31, 2024 are expected to be $1.51 billion and $90.98 billion, down 0.7% and 4.1% year over year, respectively.
expanded assessment
In terms of non-GAAP forward P/E, AAPL’s 25.89x is 3.1% higher than the industry average of 25.10x.2.75x non-GAAP peg 42.1% higher than the industry average of 1.94x. Similarly, the company’s forward EV/EBITDA of 19.38x is 29.5% higher than the industry average of 14.97x.
various profitability
In terms of trailing 12-month EBITDA margin, AAPL’s 33.73% is 258.4% higher than the industry average of 9.41%. Similarly, the company’s trailing 12-month asset turnover is 1.10x, which is 79.3% higher than his industry average of 0.61x. Additionally, the company’s trailing twelve month return on common equity of 154.27% is significantly higher than the industry average of 3.10%.
On the other hand, its gross profit margin for the trailing 12 months was 45.03%, which is 6.8% lower than the industry average of 48.29%.
POWR Ratings Reflect Uncertainty
AAPL has an overall rating of C, which equates to Neutral in the POWR rating system.of power rating is calculated by considering 118 different factors, each of which is weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight different categories. AAPL stability is C grade, same as 1.29 beta.
The sentiment grade is C, which is in line with various analyst expectations. That overvaluation justifies the D grade for value.
AAPL is ranked #23 out of 39 stocks. Technology – Hardware industry. click here Access AAPL’s growth, momentum, and quality ratings.
conclusion
Investors are concerned about AAPL’s growth prospects due to volatility in the smartphone market. Moreover, it is facing increasing competition in its third largest market, China. Despite these challenges, AAPL has launched his first new product in seven years, the Vision Pro, a mixed reality headset. This is expected to become a new growth driver for the company.
Additionally, the company is actively embracing the generative AI trend and investing heavily in this space. AAPL’s foray into AI is scheduled to begin this year.
Given that analyst forecasts are mixed and stable, it may be wise to wait for a better entry point for the stock.
how Apple Inc. (AAPL) Do you want to outperform your peers?
AAPL has an overall POWR rating of C, which equates to a Neutral rating. These A and B rated stocks are: Technology – Hardware Industry: Lantronix, Inc. (LTRX), AstroNova Co., Ltd. (a lot), and Logitech International SA (Logi). To explore more Technology-Hardware stocks rated Buy, visit click here.
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AAPL stock fell $0.34 (-0.20%) in pre-market trading on Tuesday. Year-to-date, AAPL has fallen -11.57%. In comparison, the benchmark S&P 500 index rose 10.20% in the same period.
About the author: Dipanjan Vanture
Dipanjan has been interested in the stock market since his elementary school days. This earned him a master’s degree in finance and accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a keen interest in reading and analyzing emerging trends in financial markets.
post Should investors buy Apple (AAPL) in April? It first appeared stocknews.com