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Apple (NASDAQ:AAPL) is entering a crucial period in the coming months. Most analysts are expecting a significant slowdown in growth during fiscal 2016, a belief reflected in attractive valuation levels for Apple stock. If the company can outperform expectations, then Apple should provide substantial gains from current levels.

Apple looks undervalued
With a market capitalization value around $658 billion, Apple is the biggest listed corporation in the world. Still, the stock is attractively valued in comparison with metrics such as earnings or cash distributions.

Apple trades at a price-to-earnings ratio in the neighborhood of 13, a significant discount to the average company in the S&P 500 index, currently trading at price-to-earnings ratio of around 19.

The business generates massive amounts of cash. Apple produced $81.3 billion in operating cash flow during the fiscal year ended in September, and free cash flow amounted to $69.8 billion over that period. Management allocated $11.6 billion to dividends and $35.3 billion to share repurchases over the past year, for a total of $46.9 billion in capital distributions.

That means investors are being rewarded with a total shareholder yield, meaning dividends and buybacks over market capitalization, of nearly 7%. That's quite an impressive return coming from such a rock-solid tech powerhouse with undisputed financial soundness.

Analysts are expecting a slowdown
Apple is cheap for a reason, even if it's not necessarily a good reason. Wall Street analysts are on average expecting that the company will report $77.4 billion in revenue during the quarter ended in December, the first quarter of fiscal 2016 for Apple. While this is a tremendously big amount of money, it would still represent a relatively small increase of only 3.7% versus the same quarter in the previous year. For the full fiscal year 2016, analysts are forecasting modest 4.6% revenue increase.  

The company's guidance for the December quarter is for revenue in the range of $75.5 billion to $77.5 billion, so Wall Street forecasts are at the top end of Apple's own expectations for the coming earnings release.

To put the numbers in perspective, total revenue during fiscal 2015 increased by a much stronger 28%. During the quarter ended in September, the last quarter of fiscal 2015 for Apple, revenue grew by a vigorous 22% year over year. Expectations are clearly for a significant deceleration in growth over the coming quarters.

The smartphone industry is maturing, and Apple makes more than 60% of its revenue from the iPhone segment. Research firm IDC recently reduced its worldwide smartphone shipments forecast for 2015 to 1.4 billion units. That represents a 9.8% increase from 2014, but it will also mean 2015 is the first year on record in which global industry growth is below double-digit levels.

Launching the iPhone 6 and iPhone 6 Plus last year was a really smart move from Apple, as consumers eagerly embraced the larger screens in comparison with previous models. However, the new iPhone 6s and iPhone 6s Plus aren't very different from their predecessors, so many consumers could lack a big incentive upgrade to the latest iPhone versions.

Can Apple outperform?
On the other hand, Apple still has a lot of room for market share gains in the smartphone industry. According to IDC data, Apple has a market share below 16%, while more than 81% of smartphones around the world are powered by Alphabet's (NASDAQ:GOOGL) (NASDAQ:GOOG) Android operating system.

Apple has been stealing market share from Alphabet lately, and that shift could be a major positive for investors. In the words of CEO Tim Cook during the latest earnings conference call: "We believe that iPhone will grow in Q1, and we base that on what we are seeing from a switcher point of view. We recorded the highest rate on record for Android switches last quarter at 30%."

A recent report from CIRP confirms that the new iPhone 6s and iPhone 6s Plus are increasingly gaining share versus Alphabet's Android. Based on this report: "Android owners accounted for a larger share of iPhone buyers after the iPhone 6s and 6s Plus launch (26%) compared to the iPhone 6 and 6 Plus launch (12%)," so Apple looks stronger than ever from a competitive point of view.

The total size of the pie -- the smartphone industry -- is growing at a slower rate. But Apple still owns a relatively small size of that pie, and the company seems to be increasingly gaining share. Keeping this in mind, Apple could easily outperform undemanding growth forecasts for 2016 on the back of stronger-than-anticipated market-share gains.

Whether Apple will beat expectations in 2016 remains to be seen. One thing looks quite clear, though: The stock is priced for a big slowdown, and this situation puts investors in a convenient position. If growth does, in fact, decelerate, then this was already incorporated into valuation. On the other hand, if Apple outperforms expectations, the stock could deliver outstanding gains in the coming year. 

Andrés Cardenal owns shares of Alphabet (A shares), Alphabet (C shares), and Apple. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and 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.