Apple has low expectations from Wall Street analysts and investors for its second-quarter results due right after the close on Thursday, but also faces hopes for continued big buybacks.
Its reputation as a haven that can outperform in all market conditions has been refuted this year, as it sharply lags peers with better growth, a clearer AI narrative, a cheaper price tag — or all of the above. The upshot is, there may be less room for disappointment with a lowered bar, especially with a massive buyback announcement likely.
“Expectations aren’t very high this quarter, but if we get a better outlook, coupled with some reasons for excitement over AI, we could see the valuation start to expand quite a bit,” said Matt Stucky, chief portfolio manager at Northwestern Mutual Wealth Management. “It might be tough to count on that, but Apple is a high-quality defensive stock, with a lot of shareholder returns and cash flow. The shareholder returns are the dominant reason to have a position.”
Analysts expect Apple to add another $90 billion to its repurchase program… Apple has already spent more than $650 billion buying back its own stock since 2012, according to data compiled by Bloomberg.
The buybacks have been a way for Apple to support earnings. Revenue is expected to fall almost 5% this quarter, which would represent its weakest rate in more than a year, as well as Apple’s fifth quarter of the past six with negative growth… The stock is down 12% this year, compared with a gain of 2.9% for the Nasdaq 100 Index. Relative to the tech-heavy benchmark, Apple’s underperformance in the first quarter of 2024 was its sharpest in more than a decade.
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MacDailyNews Note: Here’s what analysts expect from Apple, according to LSEG consensus estimates:
• Earnings per share: $1.50
• Revenue: $90.01 billion
See also: Apple’s mammoth stock buybacks boost returns for investors – April 29, 2024
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With many headwinds, Apple is going to tank this afternoon after earning reports.
Apple should increase dividend instead of doing buybacks. Distribute the money to the owners of the company. The employees own shares that is how they should profit off of hard work. It should show up in the profits and those profits should be paid in dividends. That makes and keeps the shares valuable and provides a direct correlation between profits and return on investment.