Apple (AAPL) posted a strong fiscal third quarter. Revenue hit a record $109.4 billion, up 16.4% from a year earlier, while earnings per share rose 29% to $2.02. iPhone revenue climbed 21.7% to $54.3 billion, making it Apple’s best June quarter ever.
But investors were not impressed. Shares fell 7.4% the next day after Apple forecast September-quarter revenue growth of just 9% to 11%. Supply chain issues and memory shortages also raised worries about near-term growth.
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Apple stock had already gained 15% year-to-date (YTD) through early August, ahead of the S&P 500 ($SPX)’s 13% gain. That run-up left the stock priced for strong execution. Then, on Monday, Jefferies Financial Group downgraded AAPL stock to “Hold” from “Buy” and cut its price target to $263.66 from $285.56.
The firm pointed to supply-chain checks suggesting Apple may have dropped plans for a high-end all-glass iPhone that could have supported higher pricing. With AAPL trading near $308, do these iPhone concerns point to a bigger problem ahead?
Inside Apple’s Latest Financial Picture
Apple makes most of its money from premium devices, including iPhones, Macs, iPads, and wearables. Its Services business, which includes subscriptions and other digital offerings, adds a steady stream of recurring revenue. AAPL has returned 33.5% over the past 52 weeks and is up 11.56% so far this year.
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The stock is not cheap, though. Apple trades at 35.77 times forward price-to-earnings, well above the technology sector average of 23.67 times. It also pays a modest but reliable dividend. Apple has raised its payout for 15 straight years and pays shareholders every quarter.
Its latest dividend was $0.270 per share on Aug. 10, which works out to $1.32 annually and a 0.43% yield. That is below the technology sector’s average 1.37% yield, but Apple’s 12.11% forward payout ratio gives it plenty of room to keep raising the dividend and buying back shares.
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