Apple (NASDAQ:AAPL) has long been a winning stock for investors, though lately, many have been anticipating the eventual slowing growth of the company's flagship iPhone. That hasn't stopped Apple from becoming the world's most valuable company in terms of market cap.
The company is scheduled to release the results of its fiscal third quarter after market close on Tuesday, July 31. Let's review Apple's most recent results and a few things to look for when the company reports earnings.
All eyes on iPhone
For its fiscal second quarter that ended on March 31, Apple reported revenue of $61.1 billion, up 16% year over year. Net income of $13.8 billion jumped 25% compared to the prior-year quarter, resulting in diluted earnings per share of $2.73. These handily beat analysts' consensus estimates for $60.9 billion and diluted earnings per share of $2.64.
Revenue from the iPhone continued to make up the bulk of Apple's business, accounting for 62% of the company's sales in the second quarter. Apple sold 52.2 million of the devices last quarter, a 3% increase compared to the prior-year quarter. With the higher prices commanded by the newest models -- particularly the iPhone X -- the average selling price increased to $728 during the quarter, an 11% increase year over year.
For the fiscal third quarter, Apple expects revenue between $51.5 billion and $53.5 billion, which would represent year-over-year growth in a range of 13.4% to 17.8%. While we don't put much stock in Wall Street's short-term mindset, it can help to provide context. For their part, analysts' consensus estimates are expecting revenue of $52.34 billion, an increase of 15.3% compared to the prior-year quarter, and earnings per share of $2.18, up 30.5% compared to the year-ago period.
Other high-growth areas
Apple has taken a number of steps to reduce its dependence on the iPhone. Early in 2017, Apple CEO Tim Cook proclaimed that the company was looking to double its services revenue by 2020. Since then, the run rate has increased from $25.5 billion to $33.4 billion, so investors will be watching to see that Apple still is on track to achieve its goal.
Another area that's been gaining increasing traction is the company's other products segment, which includes Apple Watch, AirPods, iPod Touch, Apple TV, Beats products, and the HomePod. This category has been booming, producing revenue of $3.95 billion last quarter, a year-over-year increase of 38%. Within that group is an even higher growth segment -- wearables, which is made up of Apple Watch, Beats, and AirPods. Sales of these highfliers increased nearly 50% year over year.
And those buybacks
Investors will recall that last quarter, Apple announced a hefty $100 billion share repurchase, revealing that the previous $210 billion allocation would be completed during the fiscal third quarter. Since early 2013, Apple's buybacks have resulted in a steadily falling share count, which is down more than 25% over the past five years.
Apple CFO Luca Maestri said the company intended to execute the buyback "efficiently and at a fast pace," so investors will be keeping an eye out for additional updates on the share repurchases.
More to come?
Investors also will be looking to see if Apple's guidance is enthusiastic for the coming quarter, as it may provide insight into the company's expectations for future iPhone debuts.
Apple is widely expected to announce a variety of new iPhones coming in September, which would be consistent with the company's historical product release schedule. Of particular interest are rumors that Apple will offer multiple versions of the flagship device, including a larger version of the iPhone X. Apple only released one version of its top-of-the-line iPhone previously, and there could be a sizable market for a larger-screen model.
Apple started off its fiscal year with two record-breaking quarters and there's reason to believe that the company's strong performance will continue into its third-quarter earnings report.
Danny Vena owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.