Apple Inc. (AAPL) Stock Under Pressure as Profits Shrink


Apple Inc. bulls are facing a rising tide of data pointing in the opposite direction. Recent stock trading and analysis related to the iPhone maker is decidedly and uniformly bearish, says USA Today.


Apple estimates slashed

Latest analysis came when the brokerage unit of Citigroup reduced its earnings estimates for the second half of Apple’s fiscal year ending in September. Citi attributed knock-on effects from the United Kingdom’s decision to leave the EU.

But Britain’s exit from the EU is just one of the worry on the Wall Street. The average earnings estimates that were decreased for the iPhone maker three months ago were reduced again in June for Apple’s current fiscal year, current quarter and next year as well.

For example, during the last 30 days analysts, who cover the stock, slashed 3 cents a share off their estimates for the quarter and fiscal year ending in September. In the current period (fiscal Q4), the Cupertino-based firm is seen earning $1.63 a share and $8.25 for the full fiscal year. Both are lower than the last year’s numbers.

These near-term estimates, like the ones for the fiscal third-quarter (expected to report on July 26) are baked into its stock price already, argue Apple Inc. bulls. However, Wall Street knocked down its collective profit view last month on Apple by 8 cents a share for the fiscal year ending in 2017. This might sound small, but the cumulative effect of all these cuts effectively kill the medium-term growth case for the shares since Apple’s last earnings call in April.

Rising bearish signs

Apple is expected to be a company with smaller annual profit by September 2017 and lower annual sales than it posted in fiscal 2015. The sales are seen dropping from $234 billion to $226 billion during these two fiscal years while the earnings per share are seen falling from $9.22 to $9.03. This two-year estimate trend could prove devastating for the tech giant if you believe that annual declines forces stocks to fall while year-over-year growth in annual profit driver stock prices higher.

Apple’s 50-day moving average price dropped below their 100-day moving average in mid-June. The shares of the tech giant dropped 25% during the next six months, when the same happened last July. A look at Apple Inc. chart reveals it is closer to testing its 52-week low, than jumping back to its 52-week high.

It is hard to find any numbers that would make a momentum seeking investor to buy Apple, unless the iPhone maker issues a better-than-expected forecast or reports better-than-expected results later this month.

On Wednesday, Apple shares closed up 0.57% at $95.53. Year to date, the stock is down almost 11% while in the last one-year, it is down over 24%. The stock has a 52-week high of $132.97 and a 52-week low of $89.47.

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    Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.


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