Apple Inc. (NASDAQ:AAPL) announced its earnings after the close of market on Wednesday. The company revealed earnings of $13.81 per share, on revenues of $54 billion for the final three months of 2012. The firm’s gross margin came in at 38.6%. The company’s stock has slumped in recent months leaving investors worried about what might cause a rise in the stock.
Analysts predicted that the company would announce earnings of $13.55 per share on revenues of $54.9 billion. Analyst opinions of the company have become more and more erratic in recent weeks as the firm’s future success appeared to be less than guaranteed. Some have speculated that the current low in the firm’s stock price makes it a valuable buy.
Third Point's Dan Loeb discusses their new positions in a letter to investor reviewed by ValueWalk. Stay tuned for more coverage. Loeb notes some new purchases as follows: Third Point’s investment in Grab is an excellent example of our ability to “lifecycle invest” by being a thought and financial partner from growth capital stages to Read More
In the Apple Inc. first fiscal quarter of 2011, the quarter that corresponds to today’s results, the company earned $13.87 per share. Revenues for the last three months of 2011 came to a total of $46.3 billion. The exceptional performance of the company in the quarter one year ago caused many to conclude it could not possibly beat those numbers this year.
Apple Inc. (NASDAQ:AAPL) has faced challenges, in particular growing competition in the smart phone market. The volatility in the company’s stock price may not subside with the earnings release. At lest one analyst expects this quarter’s earnings announcement to complement one of the most volatile periods in the company’s history.
There has been increased competition in the smart phone market, and though it is often ignored, the tablet market. The smart phone market is a new one, and volatility should be expected as investors reexamine the fundamentals.
As those fundamentals go, Apple Inc. (NASDAQ:AAPL) is still doing incredibly well. The company maintains a higher margin than its major competitor Samsung Electronics Co., Ltd. (LON:BC94), and its marketing is still far ahead of the competition. Apple is the most valuable company in the world, an absurd honor for a consumer electronics company, there will be competition but a firm of its size will be able to respond to changes in the market.
But Apple Inc. (NASDAQ:AAPL) investors appear dissatisfied. The company is trading at an incredibly low P/E. Today’s stock price puts it at less than 12, the P/E of a company not expected to grow quickly in the years to come. Despite this, Apple is expected to grow massively, if not in developed markets, then in developing markets. The iPhone is now available in more countries than ever before.
Apple stock has been trading at around $500 per share for over a week now, in anticipation of this earnings report. It’s too early to enumerate the reactions of post market trading, but tomorrow’s movements in the price will show how the market responds to today’s news. As with everything Apple, things may not turn out as expected.
This afternoon’s earnings release puts an end to weeks of speculation about iPhone sales, and competition reports. For that we should at least be happy. Apple investors are, of course, unlikely to see it that way. Tomorrow’s trading, and the all important conference call will be the real metrics of how Apple Inc. (NASDAQ:AAPL) is doing in the eyes of investors.