Apple Inc. (AAPL, Financial) traded around $174 per share at market open Nov. 3, up 3% from the previous close as the company reported strong earnings performance during the 12 months ending Sept. 30.
Company reported strong revenue growth across its top line products
Apple CEO Tim Cook said the company accelerated revenue growth for the past four consecutive quarters, contributing to a 24% year-over-year earnings growth during the fiscal fourth quarter. The company reported $2.07 earnings per diluted share, outperforming analyst expectations by approximately 14 cents.
Cook introduced several new products at the Sept. 12 keynote, including the Apple Watch Series 3, the 4K Apple TV and three new top-line iPhone products. During the earnings call, the CEO discussed how strong demand for iPhones, iPads and Macs boosted revenues across the globe, including China and India. Further, Cook said the iPhone 8 and the iPhone 8 Plus are now “the two most popular smart phones around the world.”
Here's what Cook just said on the Apple conference call from CNBC.
Cook also underscored the robust growth of the Apple Watch and services business, with the former showing unit growth over 50% for the past three quarters and the latter reaching an all-time high. According to the CEO, annual revenues for Apple’s “wearables” business is equivalent to that of a Fortune 400 company while the annual revenues for the services business is equivalent to that of a Fortune 100 company. Management also said in the earnings call that Apple is “well on its way” to double its fiscal 2016 service revenues by fiscal 2020.
Company offers strong growth potential despite high valuations
Cook offered a solid earnings outlook for the 2017 holiday season, saying it would be “one of the best holiday seasons ever.” Apple Chief Financial Officer Luca Maestri said fiscal first-quarter 2018 revenues are expected to range between $84 billion and $87 billion, which would exceed revenues from the three months ending Dec. 31, 2016 by approximately $5 billion. While Cook warned it can be difficult to determine which iPhones will generate the most sales, the CEO is “bullish” about iPhone sales in general.
GuruFocus ranks Apple’s profitability 8 out of 10 as the company’s profit margins and returns outperform over 97% of global competitors. The high profitability rank suggests Apple offers strong growth potential even though its price-sales ratio and EV-sales ratio are near a five-year high.
Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) CEO Warren Buffett (Trades, Portfolio) gained approximately 41% on Apple stock based on GuruFocus estimates.
Disclosure: The author has no positions in the stocks mentioned.
