It’s a pivotal week for earnings as multiple mega-cap technology companies are scheduled to release their quarterly results. The market is greatly anticipating this moment, as the strength of these mega-cap names has become a source of admiration and is expected to maintain the overall market momentum.
Among these companies, the tech giant Apple (AAPL) is set to announce its quarterly results on February 1st, after the market’s close. Apple has been on a solid earnings streak, consistently surpassing consensus earnings and revenue expectations over the past three quarters, which has triggered a strong rally in its shares.
So, what are the key figures and metrics that investors should watch for in Apple’s upcoming earnings release?
Headline Figures
Analysts have maintained a bullish outlook on Apple’s bottom line, with the Zacks Consensus EPS Estimate sitting at $2.09, reflecting a 1.5% increase since November and suggesting a year-over-year growth of about 11%. Meanwhile, revenue expectations for the quarter have been slightly revised downwards to $117 billion, a 1.4% decrease over the same period.
Key Metrics
Apple’s services portfolio, including Apple Music, Apple TV+, Apple Arcade, and Apple Pay, has been a significant source of growth. For the quarter, the company is expected to report $23.3 billion in services revenue, showing a 12.5% increase from the year-ago period. Investors will also be closely monitoring iPhone revenue, which is projected to reach $68.6 billion, signaling a 4% year-over-year growth.
Valuation
Apple’s shares are currently trading at a premium relative to historical levels, with the forward 12-month earnings multiple at 28.4X, above the five-year median of 25.2X. The forward 12-month price-to-sales ratio is also near five-year highs, standing at 7.4X compared to the 6.0X five-year median.
Bottom Line
As we approach Apple’s earnings release, investors are eagerly anticipating the company’s performance, particularly in its services segment and iPhone sales. The company’s dominant position in the market has justified its premium valuation, as reflected in its share performance. At present, Apple holds a Zacks Rank #3 (Hold).
