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.
Eric Bleeker, CFA, has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.