Apple investors have reason to celebrate. On July 30, 2019, the Cupertino tech giant reported third quarter results. Quarterly revenue grew 1% more compared to the third quarter of 2018.
International growth is a major reason for Apple’s improved revenues. Fifty-nine percent of Apple’s revenues came from International sales. While this number is impressive, it also shows that Apple has room to grow. As they release products in more nations, revenues will only increase.
The rest of 2019 is shaping up to be a good year for Apple. As new products ship toward the end of the year, even higher revenues are expected.
Services played a key role in expanding Apple’s revenue stream. Apple has always been plagued, yet blessed, by the success of the iPhone. As the iPhone has started to reach market saturation, the company’s over reliance on the device for revenues has concerned investors. Growing revenues from services is an important step in ensuring they’re not putting all of their eggs in one basket. A more diversified Apple is more appealing to investors. Better services keep customers using Apple devices and provide a steady revenue stream.
To date, this June quarter has been the most successful in Apple’s history. Their guidance for the fourth quarter promises even more gains. Apple expects revenues to range between $64 billion on the high end to $61 billion on the low end. Operating expenses are expected to be between $8.8 and $8.7 billion. With a tax rate of 16.5% and $200 million in other income and expense, a gross margin of 37.5 to 38.5 percent is expected.
What does all of this mean to investors? It’s probably best to hold on to that Apple stock. With a 77 cent per share dividend and more room to grow, there’s no good reason to sell, for now.
Investors should keep an eye on global economic forecasts, however. Demand for Apple products is elastic. Consumers don’t refresh Apple products when times are tough. Investors looking to exit Apple may be wise to do so on a high note. Although the company has a lot of room to grow, this development takes place within a macroeconomic environment. Recessions, trade wars and other factors will likely influence Apple stock value.
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