Growth in tougher competitive conditions
Apple (NASDAQ: AAPL) is scheduled to release its Q3 earning report and press conference with investors and analysts on Thursday, July 28, after market close. Apple's Q3 2022 covers the months of April, May, and June.
EPS Estimates by different analysis agencies are between $1.01 and $1.20, an almost 11% decline from $1.30 in Q3 FY 2021. The Consensus Revenue Estimate also is about $82.7B. Gross margin is also expected to decline from 43.7% last quarter — high for Apple historically — to between 42% and 43%, the company said in April.
According to the FactSet prediction, Apple's Greater China sales will be around $13.79 billion, which would decline from the $14.56 billion sales from a year ago.
Remember, in Q2, Apple earned $97.3 billion of revenue – an increase of 9% year over year, with $25 billion in profit and $1.52 earnings per share.
On the sales front, expect the iPad, which fell due to supply shortage, all other company segments had better results than a year ago. In Q2 2022, Mac products with revenue of $10.43 billion (up 14.3%) were the second best sale of the company, and then the Services segment with $19.82 billion (up 17.2%). As always, in the second quarter also, iPhone remained Apple's best sales with a revenue of $50.57 billion.
Concerns for this quarter also are almost identical to the second quarter. Closed shops in Russia and supply chain restrictions are still affecting production. On top of them, the latest published US consumer confidence numbers and inflation issues can also affect Apple's sales. We should also remember that the third quarter for apple is always the weakest quarter, as it is just a few months before a new product release, so many apple fans will be waiting for September and October to change their phones and buy new updates.
Important points that should be noted in this report:
While iPhone is still the company's best sale, in recent years, Apple has focused a lot on the service segment. Apple now offers services in more expansive fields, including Its apple stores in almost all of its products, Apple TV, Apple Music, Apple Pay, Apple Car, Clausd service, and advertisement. Therefore, the critical progress for the company in this quartet and subsequent years will be its service sector which must be watched more closely. Analysts expect the company to generate $79.8 billion in services revenue for this fiscal year, up 16.6% compared with the previous year. Though it is not a significant part of its overall revenue, it is the company's main focus.
From the technical point of view, Apple shares price increasing in a clear uptrend. If the earnings report also can help the stock to stay stable above $150, then doors will open for even higher numbers, while falling back under this level can hold the pressure on it for the short term. In the long term, $136 is critical support, and investing above this level seems like a profitable investment.
