Apple Inc.

AAPL Details

Highest Q4 Income Aided by Strong Services Revenue:Apple Inc. (NASDAQ: AAPL) manufactures and distributes mobile communication, media devices, and personal computers. The company is also indulged in selling a variety of products and services such as mobile related software, services, accessories and third-party digital content and applications. The Company sells and delivers digital content and applications through its digital content and services iTunes Store®, App Store®, Mac App Store, TV App Store, Book Store and Apple Music®.

Q4FY19 Operating Performance for the Period ended 28 September 2019:Apple Inc. declared its fourth quarter results for FY19, wherein the company posted a y-o-y growth of 2% in revenue to $64.04 billion. Net income came in at $13.68 billion as compared to $14.12 billion during Q2FY18. The company delivered growth across services, wearables and iPad segments. The company has delivered $21 billion to shareholders, which includes ~$18 billion in share repurchases and $3.5 billion in dividends and equivalents. The company reported gross margin at $24.31 billion as compared to $24.08 billion. In percentage terms, gross margin during the quarter stood at 37.97% as compared to $38.29% in the previous corresponding quarter. The company’s research and development as a percentage of total revenue stood higher at 6.42% as compared to 5.96% in Q4FY18.

 

 
Q4FY19 Income Statement (Source: Company Reports)
 
The Management has announced a cash dividend of $0.77 per common stock held, payable on 14 November 2019.

Segment-wise Performance:As per the product portfolio, the company operates across five segments, namely iPhone, Mac, iPad, Wearables, Home and Accessories and Services. During the quarter, the company derived 52.1% revenue form iPhone category, delivering revenues at $33.362 billion which saw a decline of 9.23% on pcp basis. AAPL’s 19.5% revenue accounts for services segment. Wearables, home and accessories segment accounted for 10.2% to t $6.52 billion, posting strong growth of 54.39% on y-o-y basis. Revenues from Mac and iPad segments stood at $6.991 billion and $4.656 billion, registering a change of -4.75% and 16.9% on y-o-y, respectively.

Guidance:As per the Q1FY20 guidance, the company expects revenue between $85.5 billion and $89.5 billion and gross margin between 37.5% to 38.5%. The operating expenses are forecasted between $9.6 billion to $9.8 billion. The company expects nearly $200 million of other income and an income tax rate of 16.5% for 1QFY20.

Stock Recommendation: The stock is trading at $243.26 with a market capitalization of $1099.33 billion. The company posted a decent set of numbers for Q4FY19 along with an operating cash flow of $19.9 billion.AAPL is committed to provide the best user experience to its customers through its innovative hardware, software and services. The Company’s business strategy leverages its unique ability to design and develop its own operating systems, hardware, application software and services to provide its customers products and solutions with innovative design, superior ease-of-use and seamless integration. The company has reported net profit margin at 21.37%, higher than the industry median of 6.4%. The ROE of the business stood at 14.6% as compared to the industry median of 2.4%. AAPL’s products have done well in Americas and Rest of Asia, delivering growth of 6.56% and 6.62% on y-o-y basis. Considering the aforesaid facts, we recommend a ‘Hold’ rating on the stock at the current market price of $243.26, down 0.01% as on 30 October 2019.


AAPL Daily Technical Chart (Source: Thomson Reuters)

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