Apple Becomes the First US Firm to Cross the $800 Billion Mark Email not displaying correctly?
[View it in your browser](.
Less than two years ago, Appleâs market capitalization edged past $700 billion â a level hitherto achieved by any U.S. company. And now, the iPhone makerâs market value has crossed $800 billion, again a first for a U.S. firm. With Appleâs latest efforts to juice up shareholder incomes, coupled with its seeming dominance in the higher-end smartphone market, is Appleâs stock poised to reach an even higher milestone?
Are Plans of Higher Shareholder Payments Bolstering Appleâs Rally?
The firmâs announcement on May 2, to scale up its distributions to shareholders could have helped in catapulting its market cap beyond $800 billion last week. Apple decided to pump up its program of returning capital to shareholders by + $50 billion and will extend the programâs timeframe to include four more quarters, so the cumulative distribution to shareholders is expected to reach $300 billion by March 2019.
And, that includes a +$35 billion increase in share repurchases. From $175 billion planned a year earlier, the firm is now authorized to buy back $210 worth of shares from stockholders. Share repurchases by a corporation are often taken as a sign of its ample cash â a theory that perhaps couldnât have a better example than Apple, given the firmâs reputation as one of the top cash hoarders in the world.
Buybacks lower the count of outstanding shares, potentially boosting a corporationâs earnings per share (EPS) â often a crucial metric in investing decisions. An increase in EPS raises chances of each share earning higher payouts than before â thereby potentially auguring well for shareholder income from the stock. As announced already by Apple, its shareholders are set to receive $0.63 dividends per share - an increase of +10.5% by May 18.
Appleâs Earnings Report
Earnings and revenues play critical roles in reflecting a corporationâs fundamental potential and therefore in guiding the direction of its stock price. Despite some decline in quarter-over-quarter basis, Appleâs top and bottom-line numbers in the recent fiscal quarter experienced solidly positive growth year-over-year â something that may have offset some of the concerns surrounding iPhone unitsâ lagging sales.
Appleâs earnings surged +4.8% in its second fiscal quarter (ending April 1, 2017) from the year-ago period â marking a sharp turnaround from the preceding four quarters, each of which registered negative year-over-year growth in earnings. The quarterly earnings per diluted share of $2.10 was an improvement over $1.90 of the same quarter last year.
Year-over-year, fiscal Q2 revenues grew faster compared to the previous quarter.
Are Investors impressed with the iPhone?
Smartphones account for around two-thirds of Appleâs revenues. The number of iPhone units sold dipped -1% compared to the year-ago quarter, but t this not prevent revenues from iPhone sales from reaching +1% over the same period. This means demand for iPhones was relatively less elastic to their price rise, thereby validating Appleâs market clout in the pricier phone segment.
And, its gearing up to launch upgraded versions of two of its existing models plus the brand-new iPhone 8 (reportedly whatâs going to be its most expensive one) this year â potentially adding to investor confidence about the firmâs expansion.
Bottom Line for Investors
Increasing payments to shareholders, year-over-year growth figures and the new lineup of products seem to have worked well in pushing Appleâs value through the $800 billion threshold. Already, there are conjectures on the possibility of it reaching $1 trillion by this year â for which Appleâs per share price needs to rise +23% further. Its price has rallied close to +35% so far this year.
Price rally alone is not sufficient for investing decisions. To understand whether buying a stock at a high price is justified by its long-term return potential, it is essential to stay up-to-date on the underlying fundamentals. At Zacks Investment Management, we leverage the latest data to help our clients earn long-term rewards from their portfolios. We also guide them in planning investment strategies suited to their individual financial goals. If you need help ensuring that your asset allocations are in line with your financial objectives, time horizon and risk tolerance, feel free to call us at 312-265-9312.
In the meantime, to learn more about investments strategies that could meet your investing needs, check out our Deanâs List of Investment Strategies. This report outlines five of our investment strategies that are currently ranked in the top 7% of their respective classes according to Morningstar (as of 3/31/17). To get your free copy, click on the link below:
[Download Zacks Dean's List of Investment Strategies](
[Follow on Twitter]( [Friend on Facebook]( [Forward to Friend](
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. Inherent in any investment is the potential for loss in bold as well.
Zacks Investment Management, Inc. is a wholly-owned subsidiary of Zacks Investment Research. Zacks Investment Management is an independent Registered Investment Advisory firm and acts as an investment manager for individuals and institutions. Zacks Investment Research is a provider of earnings data and other financial data to institutions and to individuals.
This communication is for informational purposes only and nothing herein should be construed as a solicitation, recommendation or an offer to buy or sell any securities or product, and does not constitute legal or tax advice. The information contained herein has been obtained from sources believed to be reliable but we do not guarantee accuracy or completeness. Zacks Investment Management, Inc. is not engaged in rendering legal, tax, accounting or other professional services. Publication and distribution of this article is not intended to create, and the information contained herein does not constitute, an attorney- client relationship. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional legal , tax, or accounting counsel.
Returns for each strategy and the corresponding Morningstar Universe reflect the annualized returns for the periods indicated. The Morningstar Universes used for comparative analysis are constructed by Morningstar (median performance) and data is provided to Zacks by Zephyr Style Advisor. The percentile ranking for each Zacks Strategy is based on the gross comparison for Zacks Strategies vs. the indicated universe rounded up to the nearest whole percentile. Other managers included in universe by Morningstar may exhibit style drift when compared to Zacks Investment Management portfolio. Neither Zacks Investment Management nor Zacks Investment Research has any affiliation with Morningstar. Neither Zacks Investment Management nor Zacks Investment Research had any influence of the process Morningstar used to determine this ranking.
Copyright © 2016 , All rights reserved.
© Zacks Investment Management
227 W. Monroe
Suite 4350
Chicago, Illinois 60606
[unsubscribe from all emails]( [update subscription preferences](