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Financial Evolution for Apple

David Becker
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www.iforex.com
Financial Evolution for Apple

Apple’s shares (NASDAQ:AAPL) are higher ahead of the opening bell in the US as the company reported earnings and created evolutionary results, which generated some market enthusiasm. Premarket the stock is up more than 7% after the company’s FQ2 results beat forecasts and it unveiled a number of surprising goodies for investors.

Net profit grew 7% to $10.2 billion, on earnings per share of $11.62 and revenues rose 4.7% to $45.6 billion. Although iPad sales of 16.35 million missed expectations of 20 million, the strong results were directly a result of much better than expected revenues from iPhones in the quarter, coming in at 43.7 million units versus expectations that ranged as low as 36.5 million units. Apple’s Q3 is not expected to be quite as robust. The company is guiding to $36 to $38 billion in revenues; margins of 37% to 38%; expenses of $4.4 to $4.5 billion; and a tax rate of 26.1%.

The guidance is interesting in that it implies the June quarter will be substantially below the March quarter. Historically Apple has seen a season increase where the stock has been higher in July 75% of the time over the past 15 years.

Besides beating on the top and the bottom line, Apple unveiled a 7:1 stock split, which will allow many more individual investors to purchase the stock. This should further drive the price higher as those who could not afford the $500+ price tag will now have entrance into a bellwether stock.

chart-financial-evolution-for-apple.png

Apple will likely test resistance near the November highs which will be a key resistance level. A break of this level will likely lead to a test of $600 per share. Momentum is strong as the MACD (moving average convergence divergence) index generated a buy signal. This occurs as the spread crosses above the 9-day moving average of the spread.

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