3 Ways Apple Can Stop Its Slide

In the video below, Fool tech analyst Eric Bleeker looks at Apple's (NASDAQ: AAPL  ) recent slide, and three catalysts which could change Apple's direction. Eric notes that the biggest anchor on Apple in recent months has been its declining gross margins, which led to flat earnings last quarter and the likelihood of falling earnings in Apple's next quarter.

Eric notes that last quarter the company had to face a tough year-over-year comparison of 44.7% gross margin, and next quarter it'll face 47.4% gross margin. Sky-high year-over-year margin comps will abate in the June and September quarters, when the company posted 42.8% and 40% margins, respectively, in the quarters last year. Year-over-year gross margin comparisons that aren't as high as this quarter, and the next could make it easier for Apple to post earnings growth as the year progresses. Second, Eric also notes that new products that can move Apple's bottom line have been almost entirely discounted by the market. If Apple can successfully create an Apple TV product or expand its iPhone product line, that could provide growth opportunities the market isn't factoring in at today's prices.

Finally, Eric discusses how investors are unwilling to give tech companies much "credit" for cash on their balance sheets due to their history of bad acquisitions and not returning cash to shareholders. If Apple signaled a use of its cash like accelerating share buybacks or boosting its dividend, that could boost the multiples investors are willing to pay for Apple. To see Eric's full thoughts on catalysts that could stop Apple's slide, watch the video below.

There's no doubt that Apple is at the center of technology's largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and more importantly, your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2214165, ~/Articles/ArticleHandler.aspx, 8/30/2014 10:44:44 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement