Apple Rises on Earnings—Is It Too Late to Buy?

If Apple Inc.‘s (AAPL) latest quarterly results are any indication, it’s going to be a happy holiday shopping season for the gadget giant. AAPL shares climbed after hours on Tuesday after the company reported higher-than-expected sales and earnings for the fourth quarter. Let’s run down the details and see whether AAPL is still a buy.

Thanks to robust sales of the new iPhone 6S and 6S Plus—especially in China—Apple sold 48.06 million iPhones around the world last quarter. This, combined with strong Apple Watch and App Store revenue, drove companywide revenues 22.3% higher over a year ago. Meanwhile, Apple’s profits grew 30.6% over last year.

When all was said and done, Apple earned $1.96 per share on $51.5 billion in revenue. Analysts were looking for $1.88 EPS on $51.1 billion in revenue, so Apple posted a 4.3% earnings surprise and a modest sales surprise.

Pleased with these results, Apple offered a sunny outlook for the fiscal first quarter. The company expects to bring in between $75.5 billion and $77.5 billion in revenue; this is in line with the Street view of $77.1 billion in revenue. Apple is also targeting gross margin between 39% and 40%.

All the while, the company continues to reward its shareholders. Last quarter, Apple returned a whopping $17 billion to investors between dividends and stock buybacks. To date, it has completed over $143 billion of its $200 billion capital return program.

Following the announcement, Apple declared a cash dividend of $0.52 per share. Shareholders of record on November 9 will be paid on November 12. At current prices, AAPL has a solid 1.8% annual dividend yield.

All-in-all, this was a solid report, and AAPL remains a B-rated Buy.


Louis Navellier

Louis Navellier

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