During the fiscal quarter ended Sept. 25, Apple Inc. (AAPL, Financial) reported $46.9 billion in net income and diluted earnings per share of $1.67. The company’s gross margin slightly declined compared to the corresponding quarter last year.
While these values were slightly lower compared to the fiscal fourth quarter of 2015, Apple’s service revenue reached an all-quarter high of $6.3 billion in the most recent quarter, likely due to increased iPhone 7 sales and Samsung Electronics Co. Ltd. (XKRX:005930, Financial) (XKRX:005935, Financial) terminating its Note 7.
Brief summary of earnings report
As discussed in the company’s Oct. 25 current report filing with the Securities and Exchange Commission, Apple maintained a strong financial outlook during the latest fiscal quarter. CEO Tim Cook praised the fiscal fourth quarter results, showing strong gratitude to customer satisfaction to the iPhone 7, iPhone 7 Plus and the Apple Watch 2. The incredible momentum of the service business also contributed to the increased revenues.
Chief Financial Officer Luca Maestri further discussed the company’s strong fourth quarter results, including $16.1 billion in operating cash flow and completion of over $186 billion of their current capital return program. The company declared a 57-cent dividend payable Nov. 10.
Stock price climbs as company shows high growth potential
When the U.S. stock market closed Oct. 25, Apple’s stock traded at $118, representing a 0.3% increase from the previous day’s closing price. The consumer electronics company’s stock price has generally increased during October, likely due to high revenue and earnings.
While the company’s per-share revenue and EBITDA per share climbed sharply during the past three years, Apple’s revenue incrementally increased from 2006 to 2010. Despite this, the company maintained a predictability rank of 4.5 stars and a profitability rank of 8. These ranks suggest that Apple has high growth potential in the short term.
Apple’s operating margin and return on equity outperform 98% of global consumer electronics companies while the company’s net margin and return on assets outperform 96%. Additionally, the company has above-average profit margins and returns based on historical data.
Warren Buffett (Trades, Portfolio) and Ken Fisher (Trades, Portfolio) own 0.28% and 0.21% of shares outstanding, respectively, as of June 30. Based on the Standard & Poor’s 500 index grid, Apple has a combined weighting of 72.6% and one net buy among premium gurus. The company has low short percentage of float, suggesting that most investors are bullish on Apple.
GuruFocus introduced the podcast Sept. 6 and currently has two episodes. The first episode discusses John Buckingham (Trades, Portfolio) and David Rolfe (Trades, Portfolio)’s views on the future prospects of Apple. Additionally, the podcast reveals likely reasons why Berkshire Hathaway Inc. (BRK.A) (BRK.B) invests more in the company and how the iPhone 7 sales will affect the business. All members can access the podcast via iTunes, which is coincidentally one of Apple’s major products.
See also
David Herro (Trades, Portfolio) and the Yacktman Focused Fund (Trades, Portfolio) recently sold portions of their stake in Samsung likely due to declining per-share revenue. Herro has trimmed his Samsung position quarter over quarter since October 2015.
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Disclosure: The author has no position in the stocks mentioned in the article.
