Apple has a low earnings bar to clear with big buyback hopes
Apple has low expectations from Wall Street analysts and investors for its second-quarter results due right after the close on Thursday, but also faces hopes for continued big buybacks.
Its reputation as a haven that can outperform in all market conditions has been refuted this year, as it sharply lags peers with better growth, a clearer AI narrative, a cheaper price tag — or all of the above. The upshot is, there may be less room for disappointment with a lowered bar, especially with a massive buyback announcement likely.
“Expectations aren’t very high this quarter, but if we get a better outlook, coupled with some reasons for excitement over AI, we could see the valuation start to expand quite a bit,” said Matt Stucky, chief portfolio manager at Northwestern Mutual Wealth Management. “It might be tough to count on that, but Apple is a high-quality defensive stock, with a lot of shareholder returns and cash flow. The shareholder returns are the dominant reason to have a position.”
Analysts expect Apple to add another $90 billion to its repurchase program… Apple has already spent more than $650 billion buying back its own stock since 2012, according to data compiled by Bloomberg.
The buybacks have been a way for Apple to support earnings. Revenue is expected to fall almost 5% this quarter, which would represent its weakest rate in more than a year, as well as Apple’s fifth quarter of the past six with negative growth… The stock is down 12% this year, compared with a gain of 2.9% for the Nasdaq 100 Index. Relative to the tech-heavy benchmark, Apple’s underperformance in the first quarter of 2024 was its sharpest in more than a decade.
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MacDailyNews Note: Wall Street’s consensus expects EPS of $1.40 and $84.12 billion in revenue for Q224 versus $1.52 in EPS and $94.84 billion in revenue in Q223.
We’ll have Apple’s results as soon as they are available right around 1:30pm PDT / 4:30pm EDT – just check our home page: https://macdailynews.com
See also: Apple’s mammoth stock buybacks boost returns for investors – April 29, 2024
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