Markets are abuzz as the eagerly awaited week for earnings approaches, promising a reveal of the financial health of several tech giants. The performance of these behemoths has been nothing short of awe-inspiring, giving rise to hopeful expectations for robust results that will uphold the market’s momentum.
All eyes are on Apple AAPL, the frontrunner in the market, set to unveil its quarterly results on February 1st after the market closes. The company has been on a triumphant earnings spree, surpassing consensus earnings and revenue forecasts in the past three quarters, prompting a rousing rally in its shares.
But what do we expect as the curtains rise on its Q1 financials? Here’s a rundown of the headline estimates and a few vital metrics to monitor.
Headline Figures
Analysts have maintained an optimistic stance on bottom-line figures, with the Zacks Consensus EPS Estimate standing at $2.09, marking a modest 1.5% rise since November and indicating an impressive 11% year-over-year growth.
On the revenue front, expectations have seen a slight revision downwards, with the quarterly sales estimate settling at $117 billion, 1.4% lower over the same period.
Key Metrics
Apple’s services portfolio, including Apple Music, Apple TV+, Apple Arcade, and Apple Pay, has been a significant growth driver in recent years. For the upcoming quarter, the company is anticipated to post $23.3 billion in revenue from Services, a robust increase from the year-ago figure of $20.7 billion, indicating a notable 12.5% growth. Apple has consistently outperformed expectations in this segment, as evidenced below.
Unsurprisingly, iPhone revenue will also be in the spotlight, especially given the competitive landscape in other markets. The forecast for the quarter stands at $68.6 billion in iPhone revenue, signifying a modest 4% year-over-year upturn.
Valuation
Apple’s shares are currently trading at a premium compared to historical levels, with the forward 12-month earnings multiple at 28.4X, surpassing the five-year median of 25.2X. The forward 12-month price-to-sales ratio stands at 7.4X, nearing five-year highs and exceeding the 6.0X five-year median.
Nevertheless, investors seem unfazed by the premium, given the company’s dominant position, as reflected in its share performance.
Bottom Line
The upcoming week offers a packed roster of earnings announcements, with the acclaimed Apple AAPL taking center stage. Earnings estimates have seen an upward trajectory, while revenue expectations have experienced a modest downturn, with both metrics anticipated to exceed the previous year’s performance.
Market participants will be closely tracking the company’s Services results and iPhone sales, both pivotal drivers of Apple’s growth. As the release approaches, the stock presently holds a Zacks Rank #3 (Hold).