While the market has been rebounding from lows in mid-March, many high-quality companies still remain significantly below the highs seen before the coronavirus wreaked havoc on the global economy and sparked a bear market. Tech giant Apple (NASDAQ:AAPL) is one of those stocks. Shares are still down about 19% from a high in February above $327.

It's not surprising, of course, that shares of the iPhone maker are down recently. The spread of COVID-19 has not only meant that Apple has closed its retail stores in the U.S. and other markets, but also that consumers are spending less money as unemployment claims skyrocket.

The stock, however, may be oversold. After all, these challenges are likely only temporary. Eventually, the economy will open up again and many consumers and workers will resume their normal lives.

Apple is scheduled to report earnings on April 30, and investors will soon get an update on the tech giant's business -- and that update likely won't be pretty. But have shares been oversold as the market tries to price in Apple's temporary challenges?

Apple CEO Tim Cook during the company's 2019 WWDC keynote presentation

Apple CEO Tim Cook. Image source: Apple.

Apple fiscal Q2 earnings preview

The market is expecting poor results from Apple in fiscal Q2. Indeed, midway through the period, management withdrew its guidance for the quarter. A slower-than-expected return to work at its factories in China following an extended Chinese New Year aimed at combatting the spread of the coronavirus meant worldwide iPhone supply was temporarily constrained, management said. Further, demand for Apple's products in the market was negatively impacted because of the closure of its stores and its partners' stores.

With the outbreak spreading to the U.S. toward the end of fiscal Q2, the tech company's product sales likely continued to suffer during the remainder of the quarter.

On average, analysts are currently modeling for fiscal second-quarter revenue of $56.6 billion, down about 15% year over year. These estimates could come down even more as the quarterly report nears and analysts try their best to update their analyses to forecast the impact of the coronavirus on the quarter's results.

Time to buy?

While it's impossible to know whether Apple stock will trade up or down following the tech company's report, one thing is clear: The tech giant's stock price currently looks like a good deal for investors planning to hold the stock five years or more. Sure, Apple's hardware business is likely to take a big hit in fiscal Q2. But the report may also shine a light on how the tech company is morphing into a more resilient business.

For instance, one bright spot in Apple's business during the quarter may be services revenue. App sales and subscriptions, accounted for in the tech company's services segment, likely received a boost as many consumers all over the world stayed home. The iPhone still dominates Apple's sales, accounting for 55% of its trailing-12-month revenue, but services has grown as a percentage of revenue over the years, fueled by a growing base of active devices and a growing number of ways to monetize those users.

Services revenue accounted for 18% of trailing-12-month revenue, up from 13% of revenue two years ago. Further, the company's installed base of active devices at the end of 2019 was 1.5 billion, up from 1.4 billion 12 months earlier. 

It's also worth noting that Apple's services business boasts a much higher gross profit margin than its hardware sales. Services, therefore, has an outsize impact on the tech-giant's profits. Services gross margin in fiscal Q1 was 64%, compared to a gross margin of 34% for hardware.

The stock's 19% pullback from its high in February gives investors an opportunity to buy shares of a leading hardware tech company that's transforming into a hardware-and-services hybrid stock. Given Apple's strong competitive positioning across multiple hardware segments, as well as its fast-growing services business, the tech company's price-to-earnings ratio of 21 today offers investors an attractive entry point.