Apple will release results after Wall Street closing bell 🕤 Will earnings surprise? 📊

Apple (AAPL.US) will report its Q4 fiscal year results after the US session. Wall Street does not expect a compression of margins and net profits, but is mainly concerned about a slowdown in revenues, which could indicate that the company's main markets are shrinking under the pressure of macroeconomic factors. Apple's report will thus close the earnings season for major U.S. tech companies, of which markets will still be waiting for Nvidia's (NVDA.US) report (on November 21).

Expected revenues: $89.3 billion (-1% y/y; +9.31% k/k)
Expected EBITDA: $28.98 billion (+4.41% y/y; +11.26% k/k)
Expected earnings per share: $1.39 (+8% y/y; +10.62% k/k)
Expected FCF free cash flow: $24.94 billion (+19.67% y/y; +2.67% k/k)

Distribution of Apple earnings per share expectations. Source: Barchart

Apple's CFO Maestri, in a commentary on the results, indicated that he expects revenue growth comparable to Q3 (down 1% y/y) in the final quarter of the year. Estimates therefore indicate that Q4 results will almost certainly not be spectacular. What's more, Maestri conveyed that the company estimates 'double-digit' declines in iPad and MacBook revenues due to the  unfavorable base effect.

• The stock is gaining 1.9% today, but Wall Street is concerned that the company's valuation will have to be revised even if the company maintains its impressive performance on the free cash flow and earnings per share side
• Apple continues to offer products that enjoy strong user recognition and sentiment, but there is no catalyst on the horizon to help the company dynamically grow revenues
• Analysts will pay particular attention to guidance against the 'festive' Q4 of the year, and results about expectations for sales of the debut iPhone 15 - its launch did not take place in an 'encouraging' macro environment
• The company may face supply chain risks as its manufacturing is mainly in mainland China and Taiwan, and the CEO of Taiwan's Foxconn (Apple's main component supplier) has come under investigation by Chinese regulators
• Central banks are likely to have completed the cycle of rate hikes, but potential weakness in consumers caught in an environment of expensive credit and inflation that has curbed their savings could affect Apple's earnings in future quarters, as could a slowdown in consumers in China

Subsidiaries of Apple's main component supplier, Taiwan's Foxconn, are not investing in mainland China and, according to regulators, are not supporting the economy's growth - risking serious consequences from regulators. The Financial Times compared Foxconn CEO Dou Terry to Chinese billionaire Jack Ma, who suffered negative consequences along with the private market when he tried to break away from the interests of the Chinese Communist Party. Potential supply chain problems could prove to be a major challenge for Apple. Source: Financial Times

The launch of the iPhone 15 won't help?

• Analyst firm Counterpoint Research estimates that sales of the iPhone 15 in China are now 5% lower in the first 17 days compared to the sales momentum of the previous iPhone 14. Analysts at UBS stressed that waiting times are short for the new iPhone 15, which may herald that the model is not very popular. 
• Apple recently announced shipments of brand new chips and new MacBook and iMac models. During the earnings call, Apple may comment on the medium-term outlook for PC sales, where a gradual recovery in demand is expected in 2024 resulting indirectly from base effects. 
• The main catalyst for a potentially entirely new source of revenue and profit is the headset market, where Apple plans to launch the Vision Pro. Sales are expected to begin in early 2024, and if the company's guidance for Vision remains very optimistic, this could partially minimize the downward reaction in response to weaker revenue momentum.

Apple stock chart (D1 interval)

Apple's (AAPL.US) stock has been trading in an incomplete downtrend channel since July 2023, marked by black limits on the chart. In the past, as the upper limit of this technical formation was reached, there were supply reactions. Today's results may bring increased volatility, which could lead to either an upper breakout of these limits, or negate the upward impulse and initiate a downward correction. Source: xStation5