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Warren Buffett's Apple Soars on Strong 3rd-Quarter Sales Growth

Company announces 4-for-1 stock split as shares top $400

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James Li
Jul 30, 2020
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Shares of Apple Inc. (

AAPL, Financial), the top holding of Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial), surged over 6% in aftermarket trading on Thursday on the back of reporting third-quarter results that smashed analyst estimates.

For the quarter ending June 30, the Cupertino, California-based consumer electronics giant reported net income of $11.25 billion, or $2.58 in diluted earnings per share, compared with net income of $10.04 billion, or $2.18 in diluted earnings per share, in the prior-year quarter.

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Company sets new record June-quarter sales and earnings growth

Apple Chief Financial Officer Luca Maestri said June-quarter earnings growth of 18% reflected the company’s “ability to innovate and execute during challenging times.” Revenues were $59.7 billion, outperforming the Refinitiv estimate of $52.6 billion and up 11% from the prior-year quarter, driven by double-digit growth in the company’s products and services businesses as well as growth in each of Apple’s geographic segments according to CEO Tim Cook.

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Cook mentioned during the earnings call that Services set a new record in China, a region that saw high demand for the company’s new Macs and iPads. Maestri added that the iPhone SE saw strong response from customers around the globe, a trend that management expects to continue for the September quarter.

Stock exceeds $400 in aftermarket trading

Shares of Apple traded over $408 after the close, up over 6% from the closing price of $380.16. To make the stock more accessible to a broader range of investors, Apple’s board of directors approved a 4-for-1 stock split effective Aug. 31.

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GuruFocus ranks Apple’s profitability 10 out of 10 on several positive investing signs, which include a high Piotroski F-score of 8, a 4.5-star business predictability rank and an operating margin that outperforms over 96% of global competitors.

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The Dow Jones Industrial Average closed at 26,313.65, down 225.92 points or 0.85% from the previous close of 26,539.57 while the Nasdaq Composite Index closed at 10,587.81, up 44.87 points or 0.43% from the previous close of 10,542.94.

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Stocks were pressured Thursday morning on the back of the second-quarter U.S. gross domestic product tumbling at an annual rate of 32.9% according to advance estimates released by the Bureau of Economic Analysis. The department said in its press release that the decline in GDP reflects a wide range of Covid-19 pandemic responses, which included stay-at-home orders and government stimulus payments, resulting in reduced consumer and business spending.

Disclosure: Long Apple.

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