Why Apple Stock Is Rallying Right Now

Last quarter, Apple's (NASDAQ: AAPL  ) earnings beat and cash givebacks weren't enough to overcome dour guidance. The stock closed the day down more than 20% year to date and underperforming the S&P 500 by nearly twice that.

But now Apple stock is rallying about 4% after-hours. Why? The Mac maker reported $7.47 a share in profits on $35.3 billion in revenue, soundly beating estimates. Analysts were expecting $7.32 a share and $35.01 billion, respectively, according to Yahoo! Finance.

Surprisingly strong iPhone sales offset weakness in the iPad, while Mac sales came in slightly below consensus. Here's a product-by-product look at Apple's fiscal Q3 versus the median projections compiled by Fortune:

Product
Actual
Median Projected
Last Year
Growth (YOY)

iPhones sold

31.241 million

27.00 million

26.028 million

20%

iPads sold

14.617 million

18.00 million

17.042 million

(14%)

Macs sold

3.754 million

3.85 million

4.020 million

(7%)

Sources: Fortune and Apple SEC filings.

For fiscal Q4, Apple expects between $34 billion and $37 billion in revenue. Wall Street had been modeling for $37.11 billion, according to Yahoo! Finance. The board also approved $3.05 per share in dividends, consistent with last quarter's payment.

Should investors be as excited as the after-hours action in Apple stock suggests? I'd say so. In setting a new record for fiscal Q3 iPhone sales, Apple (for now, at least) alleviates fears that existing iPhone owners would migrate to Android instead of wait for iOS 7. Do you see Apple's rally continuing into tomorrow? Are you planning to buy, sell, or short Apple stock? 

Either way, Apple has a history of cranking out revolutionary products and then creatively destroying them with something better. Read about the future of Apple in the free report "Apple Will Destroy Its Greatest Product." Can Apple really disrupt its own iPhones and iPads? Find out by clicking here.


Read/Post Comments (1) | Recommend This Article (16)

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.

Add your comment.

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: 2552839, ~/Articles/ArticleHandler.aspx, 10/22/2014 8:33:07 AM

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