Apple (NASDAQ:AAPL) is a colossus and a member of the much-touted “Magnificent Seven” group of technology companies. So, AAPL stock deserves at least a “B” grade and most investors should feel fine holding some shares. Apple can’t execute perfectly in all areas and the company has to face challenges just like every other business does.
Apple has a pricey Vision Pro Headset for virtual reality applications. Let’s be honest, though. Apple’s bread and butter is the company’s smartphones. Apple sells its iPhones not only in North America and Europe, but in China as well. This isn’t a simple matter for the company, and as a result, Apple’s quarterly results may be less than perfect.
Mixed Blessings for AAPL Stock Investors
On Nov. 2 in the company’s fiscal 2023 fourth-quarter earnings press release, Apple CEO Tim Cook touted a “September quarter revenue record for iPhone.” This may be true, but it doesn’t tell the full story.
Maybe Cook can’t be blamed for accentuating the positive aspects of Apple’s financial results. After all, being a hype man is part of a chief executive’s job description.
Investors should know that Apple’s Q4 FY2023 iPhone revenue of $43.8 billion only represented an approximately 3% year-over-year increase compared to the year-earlier quarter’s 42.6 billion. That’s in line with Wall Street expectations, and it’s not bad, but it’s also not spectacular.
And with a “Magnificent Seven” company like Apple, the market wants nothing less than amazing results. Instead of “amazing,” Apple’s quarterly results could best be described as “mixed.”
Disappointingly, Apple posted its fourth consecutive quarter of declining year-over-year revenue. This time, Apple’s revenue of $89.5 billion signified a 1% decrease compared to the year-earlier quarter.
Apple’s Disappointing Product Sales
Apple’s sales slid in China, which is experiencing an uneven post-Covid-19 recovery. Specifically, Apple’s China revenue of $15.1 billion was down 2.5% on a year-over-year basis.
It’s also problematic that Apple experienced year-over-year declines in sales of certain product categories:
- Wearable, home, and accessories revenue: $9.3 billion, down 3%
- iPad revenue: $6.4 billion, down 10%
- Mac revenue: $7.6 billion, down a whopping 33%
Investors should remember Apple’s most important product is the company’s iPhone. As we discussed earlier, Apple had decent, albeit not outstanding iPhone sales results.
Finally, Apple’s bottom-line results weren’t bad. As it turned out, Apple reported quarterly earnings per diluted share of $1.46, up 13% year over year and ahead of the analysts’ consensus estimate of $1.39 per share.
AAPL Stock May Be Appropriate for a Long-Term Holding
Apple, as huge and famous as the company is, can stumble sometimes. It’s a natural part of doing business in the highly competitive technology-gadget market.
So, investors should realize that Apple is a juggernaut that will likely survive its ups and downs, but also understand that it’s not always a perfect company. AAPL stock gets a fairly confident “B” grade, and you may decide it’s appropriate for a long-term share position.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
