Apple Inc (AAPL) Q4 Earnings: Why The iPhone Maker's Stock Is Well Positioned

Category: Companies / Oct 29, 2013 2:41PM EDT

After the closing bell on Monday, Apple Inc. (NASDAQ:AAPL) reported fiscal-fourth quarter profit fell to $7.5 billion, or $8.26 per share, on revenue of $37.5 billion. During the same period a year-ago, the tech giant posted earnings of $8.2 billion, or $8.67 per share, on revenue of $35.97 billion. Analysts had expected the tech giant to post earnings of $7.96 a share on revenue of $36.93 billion, according to Reuters.

“I think the guidance was better than anyone had expected, and I think the gross margins are fairly solid,” said Mark Newton, chief technical analyst at Greywolf Execution Partners. “They’ve beaten on revenues for the first time in five quarters, so that’s certainly a positive for Apple. The stock had been up over 17 percent in the last few weeks, so it’s natural you’d see some signs of it stalling out.”

Apple said in its earnings statement that fiscal 2014 first-quarter revenue guidance during the holiday quarter is forecast between $55 billion and $58 billion, while its gross margin for the first-quarter would come in between 36.5 percent and 37.5 percent, just shy of analysts’ estimates of 37.9 percent.

“Incredibly enough, if you look at where the stock is trading now, $526, it’s only four dollars above where it ended last year. So not a big move,” said Newton. “Apple, if anything, is dramatically underperforming  the rest of the market, but I think as high-end smartphone growth starts to slow, they’re doing the necessary things, beating on revenues and earnings. Earning 37 billion dollars is not a bad thing. So the stock is well positioned in a slowing growth environment.”

The tech giant sold 33.8 million iPhones during the period, compared with 26.9 million a year earlier, which was a sales record for the September quarter.

On Tuesday, shares of Apple fell 1.19 percent to $523.56  in afternoon trading.