Should You Buy Apple Stock Before August 1? | AAPL Stock Analysis

Intro hey everyone apple is scheduled to report fiscal gear 2024 third quarter earnings results after the markets close on Thursday August 1st so in this video I'll preview what Apple stock investors can look for coming out of apple in this quarterly earnings release and I'll also answer if investors should buy Apple stock before the company announces earnings so there's a lot to cover let's jump right into it I want to thank the mle fool for sponsoring this video visit full.com parev for the 10 best stocks to buy now all right so one thing I'm looking out for apple is to stem the losses on the top line in the latest quarter ending March 30th 20124 the company reported 9.75 3 billion in revenue and that was down from 94. 836 billion in Revenue in the same quarter the prior year now I'm looking for Apple to slow these decreases in sales now one of the categories I'm seeing growth from Apple is in the services segment and I'm hoping for that to continue since services are significantly more profitable for Apple you'll notice here they report their revenue on two different segments products and sales and let's take a look at services in particular you can look at Services Revenue which increased by roughly 3 billion year-over-year while the product segment decreased by roughly 7 billion year-over-year and you'll notice that products cost of sales came in at 42.4 billion out of 66.8 billion in sales while Services costs were only 6 billion on 23.8 billion in sales what's more you'll notice that Services cost actually decreased year-over-year ever so slightly even though Revenue increased by $3 billion year-over-year that's strong indication of economies and scale which are characteristic of a Services business when you're selling services like the kind of services that Apple Sals which are digital they offer better economies in scale because costs do not rise along with increasing sales for instance if there's an extra subscriber to Apple TV Plus that's just incremental revenue on the top line for Apple they don't have to undertake any more cost with that additional subscriber that content has already been made it's already up on the platform and it's only minor incremental cost when a new subscriber adds and starts watching that content so I'm hoping and looking for Apple to continue expanding the services segment while I'm hoping and looking for Apple's product product segment decreases to stop but I don't think that's going to be the case I think Apple's product sales are likely to be down again year over-ear given there was no compelling reason for folks to buy an iPhone in this recently completed order people who are waiting to upgrade iPhones are not likely to buy right now or are less likely to buy right now given they're waiting for the latest product release from Apple that's going to be infused with artificial intelligence now another thing we're Share Buyback expecting from Apple in the upcoming earnings release is an update on their share buyback remember they announced a massive share buyback program and that's having the effect of reducing the number of shares outstanding which I've highlighted here they now have 15.46 million shares outstanding and that was down from 15.84% quarter the prior year and this has the impact of increasing the earnings per share because it takes this net income number that you'll see here 23.6 billion and that's shared by 15.46 4 million shares outstanding to create this earnings per share and so if you have fewer shares outstanding then this number is divided by a smaller number which gives you a higher earnings per share and so Apple's been massively buying back its shares and it's been reducing its shares outstanding and existing profits are split among fewer shares increasing its earnings per share Apple expects to continue that since they're generating so much cash which I'll share with you a little later in the video and they're finding limited areas where they can reinvest in the business and so they're going out and repurchasing shares now another strategy is also they're been increasing their dividend but their dividend increases haven't been as aggressive as their share buyback program another key iPhone Sales category I'm looking at is Apple sales in Greater China which fell to 16.37% limited Innovation over the last year or two it's giving competitors an opening to gain market share now the biggest driver of Apple's business is iPhone sales now even though they have the services segment growing and they have other products apple is typically what gets customers into its ecosystem I should say the iPhone is what gets customers into the ecosystem and then they're more likely to buy other products like an apple music subscription or the airpods or the Apple watch and so the iPhone is really critical to Apple's success and it's struggling recently 45.96 billion in sales down from 51.3 billion in sales in the same quarter last year I suspect more pain from this segment in the upcoming quarter and hopefully for Apple stock investors that year-over-year decrease will not be as large as it was in the first quarter as Cash Flow I mentioned earlier Apple generates significant cash flow from operations which came in at 62.5 billion in the first 6 months of its fiscal year 2024 which is flat from the first 6 months of the prior year now that's impressive for Apple to keep their cash flow flat even though total net sales are falling still Apple stock investors can benefit from this 62.5 billion and if you annualize this that's over $125 billion in cash flow Apple will generate in 20124 on what will be a another down year for the company so imagine if apple innovates and comes up with artificial intelligence that facilitates sales of iPhones and other products and if it grows from here from this massive base what a boom it could be for Apple stock investors nevertheless 100 uh 62 billion and 125 for the year if it uh does the same over the next 6 months means Apple's business will be infused with over $100 billion of cash that it can then use for dividends and share BuyBacks and reinvestment into the business now Conclusion whether or not investors should buy Apple stock before earnings right now it's trading at a forward price to earnings of 29.8 which is on the higher end of where this stock has traded for going all the way back to early 2022 so if you're thinking about investing in Apple stock which I think is a solid investment it's trading at a fair value and it's an excellent business but I wouldn't do it before earnings I wouldn't invest in Apple stock right now before earnings I don't expect to be I don't expect there to be a major Catalyst in its earnings release that will send the stock price much higher than where it's already at given that it's already near its valuation over the last couple of years and so given the added risks that you get from the downside following an earnings release I would say it's more prudent to wait until after earnings to buy Apple stock of course I'll have an update and an earnings review from Apple when they release their quarterly earnings Before I Let You Go let me tell you about the greatest deal on YouTube with just a click of a button you can get free financial analysis from a professor with Decades of investing experience so what are you waiting for hit that subscribe button and I'll see you again soon