Apple rises as Q2 results aided by iPhone strength, unveils $90B buyback

AdrianHancu

Apple (NASDAQ:AAPL) shares rose around 1% in extended-hours trading after the tech giant reported second-quarter results that topped muted analyst expectations, and unveiled a new $90B share buyback program.

For the quarter ending April 1, Apple (AAPL) earned $1.52 per share, flat year over year. Revenue was $94.84B, down 3% from $97.28B a year earlier. This was Apple's first quarterly revenue drop in almost four years. Revenue was helped by iPhone sales, which rose 1.5% year-over-year to $51.33B.

A consensus of analysts expected Apple (AAPL) to earn $1.43 per share and $92.84B in revenue.

Revenue related to wearables, home and accessories came in at $8.76B during the period, while Services revenue rose 5.5% year-over-year to $20.91B.

The Mac and iPad segments accounted for $7.17B and $6.67B, down 31% and 13% year-over-year, respectively.

Revenue from Greater China came in at $17.81B, down 2.9% year-over-year, as the company continues to deal with the fallout of COVID-19 lockdowns that ended late last year and the country returns to a more normal economic state.

In addition to the $90B buyback, Apple (AAPL) raised its quarterly dividend by 4.3% to 24 cents per share, up from 23 cents. The next payout to shareholders will come on May 18.

The company will host a conference call at 5 p.m. EST to discuss the results.

More on Apple's earnings results

• Transcript of Apple's earnings call
• Apple Q2: Another Solid Beat
• Apple earnings call: New records in several countries, but Mac, iPad struggle
• Apple Beats Q2 Earnings: I'm Staying Long (Rating Downgrade)
• Apple Fiscal Q2 Earnings: Not Good Enough

Comments

[Nosay]

Can anybody please explain to me why apple goes up 5% having a meager growth of around 5 % the last 5 years or so combined with a forward PEG of > 2.8 or so (quant valuation score F and growth score D) while enphase with a forward growth of > 40% and a PEG of < 1 collapsed after the very good numbers. Really don't get it

[metoo5]

@Nosay - Can you please explain to me why returning 750B to shareholders –92% of FCF– since 2012 does not figure into your calculation at all? Can you please cite any trustworthy source for why valuation should be considered a function of growth % rate, and that magnitude of profit or anything is irrelevant?

[metoo5]

@Nosay - On the return of FCF to investors:

www.epsilontheory.com/...

[RockyCT]

@metoo5 That is an amazing graph in the link. I bet it makes Warren Buffet smile before he goes to bed.

[Maxander10]

Apple share buyback of $90 bn indicates inability to deploy private capital investments for modernization, expansion or higher capacity utilization.
This Buyback is a negative rather than positive.

[Seeking more alpha than you]

@Maxander10 I view the buyback as a positive.

[metoo5]

@Maxander10 - Nope. You can't generalize about buybacks. As Buffett has said, they may be good or bad. It all depends. For Apple they are very, very good.

www.epsilontheory.com/...

[Maverick 2021]

Nasdaq 100 makes a new 52 week high late this month as AAPL delivers again on good earnings….

The pain trade is higher…..

$$$$$$$

[Arimnestos]

Buy backs sound great, but at these price levels, earnings yield of what 3-4%? Seems like a nice dividend increase would have made more sense and, then, when prices dictate, buy back all that you can.

[Winnertakesall]

Growth has dried up and the earnings multiple is too high. Doing 90bl in buyback coached by Mr. Buffett is a terrible idea.... they would be better to leave that money sitting in a money market account.

[078956]

@Winnertakesall 90 bil is 3.5% of the market cap. I’ll take the tax-free 3.5% increase of my ownership in the company over the money earning a taxable % that doesn’t even keep up with the rate of monetary inflation. Easy decision. Warren Buffett agrees, and he’s actively buying more and more with no plan to sell—effectively increasing AAPL’s scarcity even further

[metoo5]

@Winnertakesall - in no way would it be better for anyone

[Investment Pancake]

@Winnertakesall Now that Apple is getting into the financial industry, maybe a better idea with that 90b would be to buy up some failing regional banks! Definitely lower PE ratios than Apple stock (but then again, who wants to buy a bank that was stupid enough to put short-term borrowing into 10 year US Treasuries yielding 1%)? So maybe scratch that idea.

Personally, I would just prefer a higher dividend. Buybacks are all the rage these days but they don't work well unless the company's stock is trading at bargain levels. That cannot be said for Apple IMHO.

[Greenery Financial]

Iphone strength?
Being down on a y/y inflation-adjusted basis, after raising phone prices 10% as well, is STRENGTH?

Clowns CLOWNS CLOWNS at the SA editorial team it seems...

[john.fAIrplay]

@Greenery Financial - Although I think the Editors own AAPL stock, so they're way ahead of you there.

[FirstFIREWealth_P01135809]

This is the guy Trump nominated?

But he gave some respect to Tim Apple!

www.reddit.com/...

[mizesa]

The key will be tomorrow. Sure it's easy to push AAPL up on miniscule volume in after-hours, but what about tomorrow? Will Bulls stamped to take profits? What will the real reaction be?

[tombohl54]

@5893291
Is that you Bernie? Now move along

[Drumboy]

I like when the Apple bears begin griping about Apple making lots of money.

[Val126]

@Drumboy And I like when overpriced stocks turn into multi year bear markets and fools need to wait a decade to be break even and cry all that years how that stock is a dog and how terrible is management.

[Gustave Eiffel]

Apple’s Russia (both Moscow and St Pete) iPhone revenues helped Cook beat lowered guidance eps estimates. Apple’s revenues were up just 1.5% year-on-year yet the stock has a 30 P/E ratio. This overly inflated value is why the market has a another 20% downside coming.

[ithinking]

@Gustave Eiffel
and the "Beat the estimate" goes on and on.

[InvestInMETA]

@Gustave Eiffel Apple beating estimates is why the market will drop 20%.

But everyone *around* you is crazy, you say?

[Bathman]

Apple knows Iphone reach the global saturation, the use to buyback shares make me nervous, it is because they haven't figure out how to make the next best selling cell phone. I bet "90 Billion Dollar Buyback Garage Sale!" soon. It is because more refurbish cell phone on the market so customer can save money during the "Stubborn Inflation Recession!"

[nwcccisco]

@Bathman Saturaton? Market share is 5.5% in India. China - 22.8%. US - 56.8%. Plenty of room to grow...

[TslaCon]

@nwcccisco Yeah? How many people can afford to pay their annual salary for a phone?

[InvestInMETA]

@TslaCon You think a sizable portion of the untapped iPhone customer base makes an annual salary of $799? That's the argument you're challenging people with, here?

[littlecubbie2019]

Growth is dismal. This company is cheap with its dividend. They should just stop paying it all together or raise it more meaningfully. You’d expect this type of raises out of ko or other defensives/staples.

[Seeking more alpha than you]

@littlecubbie2019 as a long time Apple shareholder, I am extremely happy with the dividend. I hope they don’t change a thing.

[Bokoblin]

@littlecubbie2019 "They should just stop paying it all together or raise it more meaningfully."

For many investors, the dividend is more juicy on a share cost adjusted basis.

[metoo5]

@Bokoblin - The taxes are even more juicy with dividends. Nope

[JDoe20]

Context - $90B on 2.64T market cap.

[InvestInMETA]

@JDoe20 So they're buying back about 3% of their total share count at once. And... you're... what? Trying to convince us that's minuscule... or something?

[SPDY84]

Who writes the headlines? Pops? 1%? lmao.

[David Jackson]

@SPDY84 Good point. Thank you -- we fixed it.

[5893291]

Is anyone else aware that this new addition of buybacks will put Apple's total at $513 billion since 2015. Sit and ponder that amount. Do we know where this money came from to repurchase shares? By significantly high priced products and services purchased by you and I. Why wouldn't SEC and apple investors be irate?

Apple stock went up like all others since Covid (despite buybacks, not because of). Now buying back at the highest price? what? Who lets a company get away with this? These outrageous amount of buybacks only pad pockets of executives, institutions (insurance, pensions, etc), and wall street. Does this bother anyone else?

[BigShoulders]

@5893291 who do you think works in the unions, corporate jobs, invests and has an ipad? Hilarious.

[anotheremptysuit]

@5893291 You and AOC. If you think they use their profits badly, don't buy their products and deprive them of profits. You can make a difference. ;-)
It is absolutely amazing that with all the jobs AAPL has shipped to China, the new irate playbook is to yell about "capitalism" instead of "globalism".

[tlapp]

@5893291
Liz Warren is that you?

[mmt59]

A good quarter, but slower growth, however liked the 90B buyback announcement. Apple will keep increasing sales of iPhones, as they begin manufacturing more phones and selling them in India, a potentially very large consumer market. Overall, satisfied as a long term shareholder, considering the current market volatility. Apple shines again!

[psypsy14]

Going to low 100s when this market corrects and collapses shortly. Good luck everyone!

[Bill West]

@psypsy14

LOL....!!!

[Seeking Falafel]

@psypsy14 Agree, post split 100 for sure.

[078956]

@psypsy14 good god, I hope so. I’ve never sold a share, and that would be a fantastic opportunity to buy more!! 😛

[combatcorpsmanVN]

Dan Ives, Wedbush got it right, AGAIN. Ives gets flack by the television commentators but, to date, his research rings the bell on AAPL every quarter.

It seems if you're not the fair haired boy on CNBC -- these commentators look past your results and tout also rans like Dan Niles - the ultra bear on just about everything. But, we do need short sellers, even if they try to remain under cover of darkness.

[Pmg1959]

Congrats to the $AAPL longs. I haven’t been able to buy the stock — and I have missed out — because I am stuck on the 30 P/E and the low growth rate. Such are the limitations of value investing, which may be a crock, since value is in the eyes of the beholder. Oh well.

[078956]

@Pmg1959 much respect to your comment. But just because there MAY be a significantly better entry point in the future, it doesn’t mean it currently is a bad investment. If the price went down a bunch, that’s when you think about finding the income to buy more.

[metoo5]

@Pmg1959 - Deep value investing is a crock. Buffett changed from a Graham type investor 40 years ago when he met Munger. He said it wouldn't scale. You should find clips of him talking about this shift. Also see how he defended Coke when buying back shares at all time highs in 1998. High quality companies are seldom cheap like Apple was from 08-2019. We probably wouldn't even think value investing was that much of a thing if it weren't for the 01 tech bubble.

Fun fact: The top-performing 2.4% of firms account for all of the $US 75.7 trillion in net global stock market wealth creation from 1990 to December 2020. Going back to 1926 it is no different. Less than 3% of stock have always carried the market.

papers.ssrn.com/...

[Nosay]

@Pmg1959 Even if you are not a value investor it's still not clear to me why the stock goes up with a lousy growth of 4% (already for 5 years) combined with a crazy high PE of 30 resulting in a PEG > 2.7!. The highest PEG of all big tech combined with the lowest growth of all big tech. Crazy. To me it looks like the herd is just following the market manipulaters (read big investors & banks etc). But this market reaction is surely not based on numbers because they are very bad, even the dividend is close to nothing