Apple Inc. (NASDAQ:AAPL)’s earnings announcement are keenly watched for more than one reason. Aside from its performance and the outlook for the next quarter, investors would be keen to know from the iPhone maker as to what it is planning to do with a cash pile of approximately over $200 billion.
It is a known fact that Apple has shipped 51.6 million units of iPhone in the first quarter, according to a recent IDC release. This represented a year-over-year increase of 0.8 percent, which is slightly ahead of the expectations of 0.6 percent. However, this is lower than the industry average of 4.3 percent growth. Similarly, modest increase could be expected from Mac book given the stable PC market in the March quarter.
Currently, Street analysts are expecting Apple the iPhone maker to deliver earnings of $2.02 a share on revenue of $52.97 billion for the second quarter. Significantly, analysts have already lowered their EPS expectations from $2.09 a share ninety days ago to the current level though they have increased it by a penny thirty days back.
Aside from that, investors’ focus would be on what the company intends to do with its cash pile of over $200 billion. There is every chance that the company might not provide any indication of what it intends to do during the earnings announcement. However, this could be raised during the conference call.
Apple started buying back its shares in 2012 and has been paying dividends. As a result, the company has returned more than $200 billion to its shareholders with over $140 billion through share buybacks. There could be two options before it. One is to boost its dividend and the other is to double its share buyback program from the current level of about $5 billion a year.
About fifty analysts have given their opinion on Apple stock. Significantly, forty-one of them have either buy or strong buy rating while eight analysts preferred to keep a Hold rating. Only one analyst has a Sell rating on the iPhone maker. Any earnings beat and upbeat outlook could result in analysts increasing their price target on the stock.
On Monday, Apple shares closed with a gain of 2.04 percent in regular market hours.