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Apple Stock Faces Headwinds Amid Estimate Revisions

Apple (AAPL) struggles with earnings revisions and high valuation. The company is rated Zacks Rank #4 (Sell), indicating potential underperformance in the near term as negative earnings revisions weigh in.

Date: 
AI Rating:   5

Current Earnings Projections: Apple is projected to post earnings of $1.61 per share for the current quarter, reflecting a year-over-year increase of +5.2%. However, over the past 30 days, the Zacks Consensus Estimate for this quarter has decreased by -0.3%. For the current fiscal year, the consensus earnings estimate stands at $7.26, indicating a year-over-year change of +7.6% with a slight revision down of -0.1% in the last month. Meanwhile, the estimate for the next fiscal year is projected at $8.16, pointing to a +12.3% change year-over-year, but experiencing a revision downward of -0.7%.

Revenue Insights: The estimated sales for the current quarter are expected to reach $93.67 billion, marking a +3.2% growth year-over-year. For the fiscal years, the $406.43 billion and $437.88 billion estimates suggest revenue growth of +3.9% and +7.7% respectively. While revenue growth remains positive, the slowing pace compared to previous periods may raise concerns among investors.

Recent Performance and Estimates: Apple reported a revenue of $124.3 billion in the last quarter, surpassing expectations by about +0.24%. Moreover, the company has consistently exceeded consensus EPS estimates during the last four quarters but faced minor downward adjustments recently. This consistent performance in surpassing estimates may provide a buffer, but the latest downgrades in earnings estimates can cause apprehension amongst investors.

Valuation Metrics: Apple is currently graded F in the Zacks Value Style Score, indicating it is trading at a premium relative to its peers. Potential investors may want to evaluate whether such a premium is warranted considering the current trajectory of earnings and revenue growth rates.

Conclusion for Investors: Overall, with a Zacks Rank of #4, the outlook for Apple's stock in the near term appears bearish. The combination of lowered earnings estimates, a premium valuation compared to peers, and mixed revenue projections could contribute to further declines in stock price projections.

Stocks:  AAPL