Investing
Time to Bite on the Dip in Apple Stock After Earnings?
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With Apple (AAPL) shares continuing to fall after reporting its fiscal third-quarter results last Thursday, investors may be pondering if it’s time to buy the dip.
Apple will certainly be joining many investors’ watchlists of notable companies like Crocs (CROX) that were able to beat quarterly top and bottom line expectations but still saw their stock fall afterward.
Like Crocs, Apple’s quarterly results were favorable but slowing growth in key business segments led to a selloff. Crocs’ popular HeyDude brand saw slowing sales growth during its most recent Q2 report in late July, and the primary catalyst to Apple’s selloff stemmed from concerns over slower product revenue for the iPhone, Mac, and iPad.
Still, Apple stock has had a strong year and now may be a good time to see if the recent dip was a buying opportunity.
Apple Q3 Review
Last week, Apple’s Q3 earnings of $1.26 a share topped estimates by 6% and rose 5% from the prior-year quarter. Third-quarter sales of $81.79 billion slightly beat expectations of $81.36 billion but dipped -1% from a year ago.
Apple stock is down roughly -6% since its quarterly report last Thursday as Wall Street soured at iPad revenue falling -20% from Q3 2022 with Mac revenue down -7%, and iPhone revenue down -2%. Overall, Product segment sales came in at $60.58 billion and dipped -4% from a year ago.
With that being said, Services segment sales came in at $21.21 billion which was up 8% YoY and set a quarterly record. The segment consists of software and services that coincide with Apple products including Apple iCloud, Apple Pay, Apple Music, and Apple TV+.
Growth & Outlook
Although Apple doesn’t provide official guidance, according to Zacks estimates annual earnings are now forecasted to dip -1% in fiscal 2023 but rebound and rise 9% in FY24 at $6.62 per share.
Total sales are projected to be down -2% this year and then stabilize and rise 6% in FY24 to $408.89 billion. With slowing product revenue being a concern at the moment, it’s notable that FY24 sales projections would still represent 48% growth over the last five years with 2020 sales at $274.51 billion.
Bottom Line
For now, Apple stock lands a Zacks Rank #3 (Hold). Although slowing Product segment sales is a concern, growth in Apple’s Services segment is promising. While it may be too soon to buy the dip holding on to Apple stock at current levels could be rewarding, especially for longer-term investors.
Apple Inc. (AAPL): Free Stock Analysis Report
Crocs, Inc. (CROX): Free Stock Analysis Report
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