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Category: Stock Market and Apple (APPL)
Date: 1 May 2020 Stock Price of Apple: $293.80 We take a look at the 2nd quarter earnings report of their 2020 fiscal year of Apple, the maker of the iPad, Macbook and the iPhone. How has the group performed during the 2nd quarter considering world wide lockdowns due to the coronavirus epidemic?
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About Apple
Apple is one of the worlds biggest smart phone and related accessories makers with the group manufacturing the iPhone, iPad, Macbook (laptops for those that don't know), Apple Watch and other related products and services. The group is starting to focus more and more on their services offering such as cloud services for their device users and services such as iTunes.
Overview of Apple's 2nd quarter 2020 earnings results
Numbers we are interested in: (for the quarter)
Apple sales by product type and category for the 2nd quarter of 2020:
So in summary Apple iPhone sales slumped, iPad sales declined significantly and Wearables, Home and Accessories saw massive increases in value of sales with it being up over 20% compared to a year ago. And services increased by almost 17% and is now comfortably the second biggest revenue generator for Apple after the iPhone.
- Sales of Products $44.965 billion (down from $46.565 billion for the same quarter of the previous year)
- Sales of Products decreased by -3.4% over the last 12 months
- Sales of Services $13.348 billion (up from $11.450 billion for the same quarter of the previous year)
- Sales of Services increased by 16.6% over the last 12 months
- Total cost of sales: $35.943 billion (down from $36.194 billion for the same quarter of the previous year)
- Total cost of sales decreased by -0.69% over the last 12 months
- Some margin gains for Apple as total sales grew slightly while total cost of sales declined slightly
- Operating income: $12.853 (down from $13.415 billion for the same quarter of the previous year)
- Net income $11.249 billion (down from $11.561 billion for the same quarter of the previous year)
- Diluted earnings per share: $2.55 (up from $2.46 for the same quarter of the previous year)
- PE ratio of Apple: 28.7
- Dividend declared: $0.82
- Dividend yield: 1.1%
- Number of shares in issue: 4.404 billion (down from 4.700 billion for the same period of the previous year)
- Cash and cash equivalents: $40.174 billion
- Cash and cash equivalents per share: $9.13
- Cash and cash equivalents makes up 3.1% of Apple's market capital
- Cash and cash equivalents makes up 12.5% of Apple's total assets
- Accounts receivable, net: $15.722 billion
- Accounts receivable makes up 4.91% of Apple's total assets
- Inventories: $3.334 billion
- Inventories makes up 1% of Apple's total assets
- Total stockholders equity in Apple: $78.425 billion
- Stockholders equity per share in Apple: $17.81
- Apple is trading at 16.5 times its stockholders equity per share which is well outside the expected range of between 2 and 4 times that most firms tend to trade at
- For some perspective the average price to book value of firms in the S&P500 is 3.34. Read more about the S&P 500 here.
- Cash generated from operations (for the 2nd quarter): $43.827 billion
- Cash generated from operations per share (for the 2nd quarter): $9.95
Apple sales by product type and category for the 2nd quarter of 2020:
- iPhone $28.962 billon (down -6.7% from $31.051billion for the same quarter of the previous year)
- Mac: $5.351 billion (down -2.9% from $5.513 billion for the same quarter of the previous year)
- iPad: $4.368 billion (down -10.3% from $4.872 billion for the same quarter of the previous year)
- Wearables, Home and Accessories: $6.284 billion (up 22.5% from $5.129 billion for the same quarter of the previous year)
- Services: $13.348 billion (up 16.6% from $11.450 billion for the same quarter of the previous year)
So in summary Apple iPhone sales slumped, iPad sales declined significantly and Wearables, Home and Accessories saw massive increases in value of sales with it being up over 20% compared to a year ago. And services increased by almost 17% and is now comfortably the second biggest revenue generator for Apple after the iPhone.
Apple (NASDAQ:AAPL) management commentary on 1st quarter 2020 earnings
Cupertino, California — April 30, 2020 — Apple today announced financial results for its fiscal 2020 second quarter ended March 28, 2020. The Company posted quarterly revenue of $58.3 billion, an increase of 1 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.55, up 4 percent. International sales accounted for 62 percent of the quarter’s revenue.
“We are proud of our Apple teams around the world and how resilient our business and financial performance has been during these challenging times,” said Luca Maestri, Apple’s CFO. “Our active installed base of devices reached an all-time high in all of our geographic segments and all major product categories. We also generated operating cash flow of $13.3 billion during the quarter, up $2.2 billion over a year ago. We are confident in our future and continue to make significant investments in all areas of our business to enrich our customers’ lives and support our long-term plans — including our five-year commitment to contribute $350 billion to the United States economy.”
Apple’s board of directors has declared a cash dividend of $0.82 per share of the Company’s common stock, an increase of 6 percent. The dividend is payable on May 14, 2020 to shareholders of record as of the close of business on May 11, 2020. The board of directors has also authorized an increase of $50 billion to the existing share repurchase program.
Apple’s board of directors has declared a cash dividend of $0.82 per share of the Company’s common stock, an increase of 6 percent. The dividend is payable on May 14, 2020 to shareholders of record as of the close of business on May 11, 2020. The board of directors has also authorized an increase of $50 billion to the existing share repurchase program.
Apple (NYSE:AAPL) stock price history
The image below obtained from Google, shows the stock price history of Apple (NASDAQ: APPL) for the last 5 years. And its been a very good time for Apple shareholders. 5 years ago the stock of Apple was trading at around $129 a stock and its currently trading at $318.39 a stock. That's a very healthy 127.8% return provided to Apple stockholders over the last 5 years.
The stock of Apple is trading at a lot closer to its 52 week high of $327.85 than it is to its 52 week low of $170.27 a stock, which to us is a clear indication that the short term sentiment and momentum of Apple stock is very positive at this point in time,
The stock of Apple is trading at a lot closer to its 52 week high of $327.85 than it is to its 52 week low of $170.27 a stock, which to us is a clear indication that the short term sentiment and momentum of Apple stock is very positive at this point in time,
Recent searches for Apple stock price
The graphic below shows the trend in searches for Apple stock price and APPL stock price over the last 12 months in the United States as obtained from Google Trends. It shows a significant spike in searches for Apple stock price in the middle of March 2020. This coincides with significant decline in their stock price due to global markets sell offs triggered by the coronavirus pandemic and its impact on global economic growth
Recent coverage of Apple
The extract below discusses Apple's latest results as obtained from TheStreet.com
Apple investors are flying blind at least for another couple of months. But on Thursday, management gave some clues on how the current quarter could shape up. Apple (AAPL) shares were down 2.6% in after-hours trading after the tech giant beat expectations on both revenue and earnings, but provided no fiscal guidance for the June quarter. That was no big surprise -- given uncertainty over the coronavirus's total economic impact this year, and how long the pandemic will last, numerous major firms have revoked forward-looking guidance this year. In lieu of that, Apple executives broke down how the health crisis played out in China in three phases, and gave color on what the June quarter might look like across specific product lines.
"The lockdown started there toward the end of January, as you know. In February we saw a steep decline in demand. We closed our stores in February. As the lockdown completed in mid-February, towards the second half of February, we began to open stores," explained Apple CEO Tim Cook on the call. "And from a demand point of view, we saw then improvement in March over February, and if you look at kind of where we are today, we've seen further improvement in April as compared to March."
Apple began opening up its China stores on a staggered basis over about 30 days between mid-February and mid-March, Cook said, also noting that Apple's global supply chain had returned to normal by the end of March. Outside sales data supports Apple's accounting of events. A Chinese agency reported that Apple sold 2.5 million iPhones in the country during March -- a three-fold increase over February, but still 20% lower compared to March 2019. Cook didn't quantify how much sales further improved in April, but said elsewhere on the call that Apple's new, budget-friendly iPhone SE had garnered an enthusiastic response from customers so far.
Read the full article here
Apple investors are flying blind at least for another couple of months. But on Thursday, management gave some clues on how the current quarter could shape up. Apple (AAPL) shares were down 2.6% in after-hours trading after the tech giant beat expectations on both revenue and earnings, but provided no fiscal guidance for the June quarter. That was no big surprise -- given uncertainty over the coronavirus's total economic impact this year, and how long the pandemic will last, numerous major firms have revoked forward-looking guidance this year. In lieu of that, Apple executives broke down how the health crisis played out in China in three phases, and gave color on what the June quarter might look like across specific product lines.
"The lockdown started there toward the end of January, as you know. In February we saw a steep decline in demand. We closed our stores in February. As the lockdown completed in mid-February, towards the second half of February, we began to open stores," explained Apple CEO Tim Cook on the call. "And from a demand point of view, we saw then improvement in March over February, and if you look at kind of where we are today, we've seen further improvement in April as compared to March."
Apple began opening up its China stores on a staggered basis over about 30 days between mid-February and mid-March, Cook said, also noting that Apple's global supply chain had returned to normal by the end of March. Outside sales data supports Apple's accounting of events. A Chinese agency reported that Apple sold 2.5 million iPhones in the country during March -- a three-fold increase over February, but still 20% lower compared to March 2019. Cook didn't quantify how much sales further improved in April, but said elsewhere on the call that Apple's new, budget-friendly iPhone SE had garnered an enthusiastic response from customers so far.
Read the full article here
Apple (NASDAQ:AAPL) stock valuation
So what do we value Apple's stock at after the release of their 2nd quarter 2020 earnings report? Following Apple's 2nd quarter 2020 earnings report our valuation model provides a target price (full value price) for Apple at $240.50 a stock (down from our 1st quarter 2019 earnings report valuation of Apple). We therefore believe that the stock of Apple is overvalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $240.50. Therefore we believe a good entry point into Apple stock is at $216.50 or below. We expect the stock of Apple to pull back from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is significantly overvalued at this point in time.
Since the stock of Apple is trading at well above our target (full value) price and our suggested entry price we will go against most market commentators and rate Apple as a sell
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $240.50. Therefore we believe a good entry point into Apple stock is at $216.50 or below. We expect the stock of Apple to pull back from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is significantly overvalued at this point in time.
Since the stock of Apple is trading at well above our target (full value) price and our suggested entry price we will go against most market commentators and rate Apple as a sell
Next earnings release of Apple
It is expected that Apple will publish their Q3, 2020 earnings report in late July 2020