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Apple Shows Why It's a Must-Own Stock for the Future

By Danny Vena - Updated Feb 4, 2021 at 5:33PM

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Investors were expecting big results, but the iPhone 12 took that to another level.

Given the robust demand for the iPhone 12, expectations were high going into Apple's (AAPL -5.64%) first-quarter financial report. Yet even the most ambitious forecast fell far short of the company's actual results. The iPhone joined Apple's services and wearables segments to deliver a trifecta of records, raising the bar for future results.

In this clip from Motley Fool Live, recorded on Jan. 27, "The Wrap" host Jason Hall and contributor Danny Vena discuss Apple's blowout results and why they position the company for future growth.

Jason Hall: Danny Vena, let's talk about Apple here.

Danny Vena: I looked at these numbers just a couple of days ago when Wedbush analyst Daniel Ives came out and actually increased the price target of Apple's stock and pushed his bullish case out to $225 a share, which is quite a bit higher. I think [the stock] closed at about $142.

I want to start by, let's share the screen here. I'm going to go straight to what expectations were. Right now, the average analyst estimate was expecting revenue of $103 billion and expecting earnings per share of $1.41. Now, remember that, $103 billion versus $1.41. Now we're going to go to Apple's actual earnings and here's what we see. Record revenue of $111 billion.

Hall: Oh my goodness.

Vena: Earnings per share of a $1.68. So, when I said "blowout," it was not hyperbole. They clearly exceeded what analysts' expectations were. They set new revenue records for iPhone sales, for wearables sales, for services sales. If you go back to when we talked about this on "The Wrap" a couple of days ago, this is what I forecast, was that we were going to see record sales in iPhones, in wearables, in services, and they've done just that.

As a result, revenue is up 21% to a new all-time high and earnings per share is up 35% to a new all-time high. I'm going to scroll down here for just a little bit. "These results helped us generate record operating cash flow of $38.8 billion."

They're also going to pay out their quarterly dividend of 20-and-a-half cents per share.

I don't think there's anything more that I can say, that not only did they issue a blowout, they blew out in every major category. Yeah, Apple, $225. [laughs]

Hall: It's funny.

Vena: Yeah. That's fabulous.

Hall: Yeah. The thing that I think it's just worth stressing here for me is you start putting more of these iPhone 12s out there around the world and it's just going to really start picking up that services revenue. So many things, they feed through the iPhone or the Apple Watch.

Man, I think I might've underestimated the prospects here. I got to say guys, I really think I did.

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