“One of the reasons being used for Apple being down today, besides the market being weak, is a report from Gartner that smartphone sales declined 4% in the June quarter in China. This was the first time that smartphone sales have declined in the market that was 30% of total smartphone sales in the world,” Chuck Jones writes for Forbes. “If this is the reason investors are selling Apple along with general concerns about China I believe they are not digging deep enough to understand why this reasoning is wrong.”
“Apple generated $13.2 billion in revenue, up 112% year over year and was 27% of total company revenue in the June quarter. This directly contradicts investor’s perception from Gartner report that Apple is having a tough time in China,” Jones writes. “China Mobile is a key driver for Apple’s growth in China. China Mobile added almost 50 million 4G subscribers in each of the past three quarters and its 19.2 million new customers in July is the third best month after 19.7 million in March and 19.3 million in June. This report is one data point reinforcing UBS’ Evidence Lab analysis that Apple could sell over 50 million iPhones in the September quarter.”
Jones writes, “I calculate that Apple’s stock is trading at less than a 10x PE multiple (9.8x to be exact) based on fiscal 2016’s earnings of $9.78 (Street average estimate) and net cash of $17 per share. While a stock can remain at low valuation levels longer than expected at some point in time the stock should move higher.”
More info and links in the full article here.
MacDailyNews Take: Let the bears have their fun and let Apple execute as many buybacks at a discount as they possibly can.
[Thanks to MacDailyNews Reader “Arline M.” for the heads up.]