Apple’s upcoming earnings report on May 1 will provide insights into the company’s performance and stock valuation. Here are key points to consider.
**Fair Value Estimate:** $200 per share, indicating fair value compared to Morningstar’s long-term estimate of $200 per share.
**Economic Moat Rating: Wide**, due to customer switching costs, intangible assets, and a network effect, which provides immense profitability and returns on invested capital.
**What to Watch for in Apple’s Earnings:**
1. iPhone Revenue Performance: Expect a normal seasonal decline but modest year-over-year growth.
2. Services Growth: Strong double-digit growth is expected.
3. Tariff Impact: Management will focus on managing tariffs, with potential pull-in of imports from China.
**Fair Value Estimate for Apple:** $200 per share, indicating fair value compared to Morningstar’s long-term estimate.
**Compounded Annual Revenue Growth:** 7% through fiscal 2029, driven primarily by unit sales growth and modest pricing increases.
Morningstar assigns an economic moat rating of wide due to customer switching costs, intangible assets, and a network effect. The company has a strong balance sheet with a net cash position of $50 billion as of September 2024.
However, Apple faces risks including reliance on consumer spending, cyclicality, and geopolitical risks due to its supply chain in China and Taiwan. Despite these risks, the company’s expansive ecosystem and stellar balance sheet make it an attractive investment opportunity.
Source: https://www.morningstar.com/stocks/going-into-earnings-is-apple-stock-buy-sell-or-fairly-valued-7