Apple EPS Estimates See Downward Revisions: iPhone Sales Growth a Concern?
Brian Gilmartin | Feb 26, 2024 02:06AM ET
We are looking at the last 5 weeks of the 4th quarter earnings for the S&P 500, and with the unofficial end of Q4 ’23 earnings this week with Walmart's (NYSE:WMT) report, despite the negativity about the quarter in November and December ’23, actual Q4 ’23 S&P 500 EPS growth was +10% as of today.
Walmart’s guidance spooked the analysts a little, which resulted in very little upward revisions to EPS for calendar ’25 and ’26, despite the healthy revisions in Walmart’s revenue estimates. (More on this in a coming blog post.)
Nvidia (NASDAQ:NVDA) has been talked about enough. There is very little that I can add to the story.
h2 Apple EPS and Revenue Revisions: /h2Apple (NASDAQ:AAPL) EPS estimate revisions peaked in May ’22, bouncing around until 8/23. Since August ’23, looking at each fiscal year Apple’s EPS negative revisions:
- fy ’24: -1%
- fy ’25: -2%
- fy ’26: -7%
- fy ’27: -3%
FY ends 9/30
From May ’22, Apple's revenue estimates have seen downward revisions. Looking at the downward revisions, here is the percentage decline by fiscal year:
- fy ’24: -11%
- fy ’25: -12%
- fy ’26: -17%
Those numbers are more than a little surprising, and not in a good way.
So what’s going on with Apple? Hardware growth has been slower as the phone giant transitions into a services business. Are iPhones now a commodity? Is Apple finding it harder to innovate around the iPhone?
Looking at return data (courtesy of YCharts), here’s Apple’s and the S&P 500’s annual return from 12/31/21 through 2/22/24:
- Apple: +1.31%
- SPXTR: +4.80%
Get The News You Want
Apple (the stock) has been almost flat for 26 months.
Just sayin.
h2 S&P 500 Data: /h2- The forward 4-quarter estimate (FFQE) this week increased to $242.76 from last week’s $242.57 and January 5th’s print of $243.98. (It’s a positive that the forward estimate is not being revised downward, as is the typical pattern.)
- The PE on the FFQE is 21x, versus 20.7x last week, so we continue to see a little PE expansion;
- The S&P 500 earnings yield has now declined for 8 straight weeks, starting ’25 over 5% and now at 4.77%. Better-than-expected S&P 500 EPS is probably keeping it from falling further.
- The Q4 ’23 bottom-up estimate is now $57.14, versus the early January ’24 estimate of $54.69;
- The S&P 500 EPS upside surprise is still at 6.8%; I thought maybe that would have been revised higher after NVDA and WMT.
- The S&P 500 revenue upside surprise is still at 1.1%
Over the next several weeks we will start seeing February ’24 quarter-end earnings releases for a host of companies, including Nike (NYSE:NKE), FedEx (NYSE:FDX), Micron (NASDAQ:MU), and a host of others.
No companies followed by this blog are reporting next week.
The Apple revenue estimate revisions are interesting.
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