Apple (AAPL) is trading at a new all time high after the company reported better-than-expected third quarter results and offered strong guidance for the fiscal fourth quarter last night.
Apple beat third quarter estimates on the top and bottom line -- revenue and gross margins came in at the high end of guidance. The company's metrics are quite staggering. EPS grew 17% while revenue rose 7% year-over-year to $45.4 billion. Apple shipped 41 million iPhones during the third quarter, that was up 2% year-over-year, and was in-line with most estimates.
These results are impressive because Apple is in front of what is believed to be a 'super cycle' for its next set of smartphones. There hasn't been a ton of incremental innovation in recent iPhone iterations so there is supposed to be a great deal pent-up demand. Apple is expected to release two new versions of the iPhone that resemble the current iPhone 7 in September (maybe the 7S/C/E and larger form factor + version).
Apple is also expected to release a ‘new' version of the iPhone that ditches the home button, includes an OLED curved glass screen and 3-D sensing technology (iPhone 8).
Strong fourth quarter guidance has allayed some concerns around the iPhone 8 encountering capacity constraints. There have been widespread reports of tight supply surrounding the OLED screens and the 3D sensing technology, which many thought would delay the iPhone 8 by weeks or months.
Apple is expected earn just over $9/share this fiscal year (ending September), up from last year but still below the 2015 peak. Apple should be able to break that record next year after a monster first quarter (ending this December).
Apple now has a ~$825 bln market cap and trades at ~17.5x earnings estimates -- slightly cheaper than the S&P 500, or 14.6x fiscal 2018 earnings estimates. The earnings multiple falls to ~12x if you back out the $261 billion cash pile the company has accrued.
Apple has a 1.7% dividend yield and increased its share buyback authorization to $210 billion last quarter.