Apple (AAPL) has faced a number of difficulties in recent months, including fierce competition from Chinese smartphone manufacturers and slowdowns in a few of its important regions. These obstacles resulted in a 2.8% decline in net sales in 2023.
Apple's performance this year hasn't improved all that much. The S&P 500 has increased by more than 10% over the same period that the company's stock has decreased by 7.2% year to date.
Let's examine the expectations of the market for Apple in the upcoming quarter and see if investing in the stock is warranted.
Despite a modest resurgence for the business at the end of 2023, when revenue increased by 2% over the prior year.
Market estimates for the current calendar quarter show a 4% revenue loss when compared to the same period last year, according to Koyfin statistics. (It's crucial to note that Apple is presently in its second fiscal quarter, even though the first calendar quarter of 2024 concludes on March 31.)
This less hopeful attitude may be partially explained by the complexities of the smartphone business, particularly in China, where Apple is still up against fierce competition. Data from Counterpoint indicates that during the first half of the year, the company's sales in this region decreased by 24%. It's important to note that Apple is declining more than its competitors, suggesting a loss of market share in this region, even though the Chinese smartphone market as a whole is struggling. In any case, an increase in Apple's gross margin is anticipated. In contrast to the 44.26% recorded in the same period the previous year, Koyfin reports that the market is presently predicting a gross margin of 46.3% for the first calendar quarter of 2024. This might be improved because Apple's Services sector generates a larger portion of revenue, which typically has greater margins.
The market expects Apple to see an increase in its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) margin.. Analysts are projecting a margin of 34.05% for the first calendar quarter of 2024, up from 32.92% during the same period last year, according to Koyfin.
It's crucial to remember that this margin is still lower than it was in the fourth calendar quarter of 2023 (36.15%). The seasonality of the holiday quarter, which typically has higher revenue and greater economies of scale, can be used to explain this reduction.