Apple (AAPL) unveiled its new set of iPhones yesterday. There weren't many surprises in the release. Pretty much everything was in-line with leaked reports. Apple's secretive nature has become more difficult to maintain as the company and its massive supply chain have grown to epic proportions.
It's all about the iPhone for Apple, which generated 56% of revenue in the fiscal third (June) quarter, but 70% of revenue in its largest first fiscal (holiday) quarter.
Pricing came in generally in-line with expectations. The company's new low-priced iPhone XR starts at $749, the iPhone XS starts at $999 while the larger XS Max starts at $1,099.
All three feature Face ID (3D sensing) technology, a faster processor and a digital eSIM card, which makes switching wireless carries much easier.
The largest form factor and a digital eSIM card are attractive features internationally, especially in China.
Apple hasn't seen much consumer pushback on its high priced premium handsets because they have become such an important tool in everyone's life. Also, most people are very much entrenched in the Apple ecosystem.
In addition, the company unveiled the Apple Watch Series 4, which brings advanced activity and communications features, along with revolutionary health capabilities, including being able to detect hard falls, and an electrical heart rate sensor that can take an electrocardiogram (ECG). Healthcare applications represent a large potential opportunity down the road.
Meanwhile, Apple's strategy to focus on profitability via higher ASPs in a saturated smartphone market has paid off as burgeoning services revenue sweetens the investment outlook.
Apple stock broke out to all-time highs last month after reporting upside third quarter results and guiding fourth quarter revenue above consensus.
Revenue growth improved sequentially for the eighth straight quarter. Upside in the third quarter came from iPhone ASPs (+19%) and service revenue (+31%).
With a $1.09 trillion valuation, Apple is the largest publicly traded company is the world. The stock trades at 19.2x FY18 (September) EPS estimates, or 16.6x FY19 EPS estimates. The earnings multiples are roughly two turns lower when backing out the company's enormous liquid assets.
Analysts expect fiscal 2019 (September) EPS to grow 16% with revenue up 5.6%. Estimates on the top and bottom line are ~1% higher than they were heading into yesterday's event.
Apple is trading within 2% of its all-time high hit two weeks ago.