Apple Inc. (AAPL) Preview

ETF SpotlightRebecca MCclayIn the middle of earnings season, Apple Inc. (NASDAQ:AAPL) is claiming center stage as it readies to release its fourth-quarter results after the closing bell today (Monday).

Apple stock is up 0.5% at $528.34 today, having risen nearly 25% since its last earnings report, and today’s results will include the initial impact of the company’s latest iPhone and iPad release. AAPL is trading in a 52-week range of $3.85 to $614.00 and at about 13 times forward earnings.

The Street consensus is for $7.94 per share on $36.8 billion in revenue, according to Capital IQ estimates. That’s well off the $8.67 per share the company reported in the fourth-quarter a year ago.

Apple has been a significant drag on the entire technology sector as of late. The information sector’s earnings are growing at about 7%, second only to consumer stocks among in the S&P 500 sectors. Without Apple, which has had declining year-over-year earnings growth for four consecutive quarters, the IT sector would have 11.3% growth, MarketWatch reports, citing an analyst at FactSet.

While we’re still bullish on AAPL, the slowing earnings growth points to the shift in Apple from a powerhouse growth stock to a long-term value investment.

Major Product Sales to Support Apple Earnings, Stock

The Cupertino, Calif.-based company this past quarter released the iPhone 5S and the iPhone 5C, reporting better-than-expected sales the weekend after the launch. Its fourth quarter ended Sept. 28, which includes about a week of sales of the new iPhones. Analysts are expecting the company to have sold about 30 million iPhone units last quarter, versus 26.9 million the same quarter a year prior.

“With Apple having pre-announced positive results in late September, we believe the key focus will be on iPhone 5C demand for the mid-range/international markets and the easing of supply constraints for the 5S,” Brian Marshall of ISI Group said in a note Monday, MarketWatch reports.

Apple also recently launched the iPad Air, which is 20% thinner and 28% lighter than the previous model. While most of the company’s performance reported today will not be driven by new products like that, investors will be eager to learn more about consumer demand for them, especially given the holiday season coming up.

One Morgan Stanley analyst told Bloomberg that iPhone sales in this current first quarter could reach 55 million, versus 47.8 million for the same quarter a year ago.

In other Apple stock drivers, mega-investor Carl Icahn has likely also been boosting the stock this past quarter with his calls for a massive buyback program. Through Tweets, Icahn has been calling for Apple to use its huge cash supply to fund a $150 billion buyback program, which he says will improve shareholder value. He made the same plea in an open letter to Chief Executive Officer Tim Cook.

Icahn’s calls for a buyback come just a few months after Apple already announced a $100 billion plan for buybacks and dividends.

Apple stock has seen earnings-driven gains in 27 of the past 40 quarters, and many analysts are expecting the same today.

Written By Rebecca MCclay From Money Morning

Earnings Update:

Apple Reports Fourth Quarter Results

Apple® today announced financial results for its fiscal 2013 fourth quarter ended September 28, 2013. The Company posted quarterly revenue of $37.5 billion and quarterly net profit of $7.5 billion, or $8.26 per diluted share. These results compare to revenue of $36 billion and net profit of $8.2 billion, or $8.67 per diluted share, in the year-ago quarter. Gross margin was 37 percent compared to 40 percent in the year-ago quarter. International sales accounted for 60 percent of the quarter’s revenue.

The Company sold 33.8 million iPhones, a record for the September quarter, compared to 26.9 million in the year-ago quarter. Apple also sold 14.1 million iPads during the quarter, compared to 14 million in the year-ago quarter. The Company sold 4.6 million Macs, compared to 4.9 million in the year-ago quarter.

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