Apple (AAPL) Gains But Lags Market: What You Should Know

Zacks Equity Research

Apple (AAPL) closed the most recent trading day at $267.99, moving +0.72% from the previous trading session. The stock lagged the S&P 500's daily gain of 1.45%. Meanwhile, the Dow gained 1.22%, and the Nasdaq, a tech-heavy index, added 0.78%.

Heading into today, shares of the maker of iPhones, iPads and other products had lost 3.4% over the past month, outpacing the Computer and Technology sector's loss of 5.61% and the S&P 500's loss of 7.42% in that time.

AAPL will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $2.21, down 10.16% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $55.20 billion, down 4.86% from the year-ago period.

AAPL's full-year Zacks Consensus Estimates are calling for earnings of $12.50 per share and revenue of $261.79 billion. These results would represent year-over-year changes of +5.13% and +0.62%, respectively.

It is also important to note the recent changes to analyst estimates for AAPL. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 7.92% lower. AAPL is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that AAPL has a Forward P/E ratio of 21.28 right now. Its industry sports an average Forward P/E of 7.72, so we one might conclude that AAPL is trading at a premium comparatively.

We can also see that AAPL currently has a PEG ratio of 2. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Computer - Mini computers was holding an average PEG ratio of 2 at yesterday's closing price.

The Computer - Mini computers industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 45, which puts it in the top 18% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow AAPL in the coming trading sessions, be sure to utilize Zacks.com.


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