The company will report results after the market close on April 28. Apple's second-quarter revenue is expected to rise 5% to $94.1 billion. Above the $90 billion Wall Street analysts had expected on average, it would be Apple's best second-quarter revenue so far. Analysts, however, expect Apple's third-quarter revenue to rise 5.7% to $86.1 billion.
The stock has performed exceptionally well during the pandemic as investors focus on Apple's expanded product line, creating its own CPUs, and a 5G upgrade cycle.
All of this has propelled Apple's revenue and earnings to record highs and helped expand the stock's price-to-earnings ratio. While Apple may be strong in the coming years, that doesn't mean its stock won't pull back anytime soon as the market reprices risk and valuations in a higher interest rate environment.
In addition, related lockdowns in major Chinese manufacturing hubs such as Shanghai, Kunshan and Zhengzhou could lead Apple to "take a more cautious stance in publishing its June quarter comments due to the unpredictability of possible future lockdowns".
The stock is currently trading at 25.2 times fiscal 2023 earnings, with earnings per share expected to be $6.55. The price-to-earnings ratio is well above its historical average of 19.6 over the past five years, a multiple the stock had never seen before the pandemic. If we look at this multiple over the past seven years, the average P/E ratio has fallen to 17.3.
It's important to remember that Apple today is very different from a product perspective than it was seven years ago, and it's much less reliant on iPhones. As services and wearables continue to grow, it's easy to see that iPhone sales as a percentage of total revenue will drop significantly. Global smartphone shipments fell 11% in the first quarter of 2022 due to the economic environment and slowing demand, according to research firm Canalys.
Samsung managed to overtake Apple in the first quarter with a 24% market share in the first quarter of 2022; Apple's market share is 18%. We can see that Apple's performance is very solid.
It is worth noting that while the iPhone 13 series can continue to drive consumer demand, the new iPhone SE launched in March has gradually become an important driver of Apple's mid-range product sales. At a similar price point to the previous generation, its chipset and battery life have been upgraded and improved, and 5G capabilities have been added to meet the needs of operator channels.
Given the increased product mix, valuations seem more likely to balance between post-pandemic highs and pre-pandemic lows, making 19 a reasonable, achievable, long-term sustainable P/E. The stock is valued at 19.6 times projected 2022 earnings
Will be around $128. This equates to a drop of around 23%.
In my opinion, every time Apple’s pullback is an opportunity to buy, it is a stable cash bull stock for long-term investors, and the stock price has always been supported and rebounded near the 200-day moving average. A heavy stock.
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