Apple Inc. (Nasdaq: AAPL) reported fiscal third-quarter earnings after the bell on Tuesday, beating on earnings per share and revenue, while also impressing on guidance. AAPL stock rose nearly 3 percent to a new all-time high in after-hours trading.
Apple earnings by the numbers. The Cupertino, California-based tech giant, which as of this writing was the most highly valued publicly traded company in the world at a valuation of more than $950 billion, reported EPS of $2.34 in the June quarter. Analysts were expecting $2.18.
Revenue came in at $53.27 billion, beating the $52.34 billion consensus estimate.
[See: 6 Reasons to Love Apple Stock in 2018.]
As with most stocks, AAPL shareholders aren’t just interested in the top- and bottom-line numbers. Aside from the headline figures, investors pay keen attention to iPhone unit sales, since the hit product still routinely accounts for 60 percent or more of its revenue.
Analysts surveyed by FactSet expected 42 million iPhone shipments in the quarter and iPhone revenue of $29.14 billion. Apple reported iPhone unit sales of 41.3 million and segment revenue of $29.91 billion instead, missing on units but beating the mark on total revenue, due to an impressive average selling price (ASP) of $724, far higher than analyst estimates.
Other AAPL highlights. Investors were quite impressed with the ASPs for iPhones, which at $724 blew the consensus $694 level of analysts surveyed by FactSet out of the water. Clearly, this indicates the product mix has moved toward the higher end of the spectrum – and toward the iPhone X in particular – more rapidly than Wall Street expected.
When customers are willing to pay more for your products, hey, that’s always a good thing.
Another impressive number? Guidance. Before Tuesday’s AAPL earnings announcement,Wall Street was expecting revenue in the current quarter (ending in September) to come in at $59.57 billion. To shareholders’ merriment, Apple guided for revenue between $60 billion and $62 billion.
Shares aren’t far away, at this point, from hitting record highs that would put Apple’s market cap above the vaunted $1 trillion level. Somewhere around $203 or $204 per share would do the trick.
Another positive in the Apple earnings report was services revenue, which clocked in at $9.55 billion in Q3, up 31 percent year-over-year. Analysts surveyed by FactSet expected revenue of $9.21 billion in that area.
Services, which includes the likes of AppleCare, Apple Pay, iTunes, the App Store and other business lines, are closely watched because the margins from this segment are impressive and many of the sources of revenue are highly scalable.
Investors saw the power of a high-margin, scalable business segment just last week when Amazon.com, Inc. roughly doubled Wall Street earnings estimates, in part due to blockbuster growth in its high-margin advertising business.
[See: 7 of the Best Blue-Chip Stocks to Buy for 2018.]
Going into Tuesday’s earnings report, Apple stock had risen 27 percent in the last year and 12 percent year-to-date. The S&P 500 is up 14.1 percent in the last year and just 5.4 percent year-to-date.