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Can Apple Sustain $700B+ Growth? - Analyst Blog

Apple Inc. ( AAPL ) is yet again making headlines. The technology giant crossed the $700 billion mark in market capitalization on Tuesday, becoming the first U.S. company to reach the milestone.

Feb 10, 2015 became the day for Apple and CEO Tim Cook, who succeeded the legendary Steve Jobs. The company's shares rose about 2% to close at $122.02 on Tuesday, escalating the market capitalization to nearly $711 billion. Presently, Apple is not only the highest valued company in the U.S. but is also twice as valuable as other prominent players like Microsoft ( MSFT ) and Google ( GOOGL ).

The company has been in the limelight following its blockbuster first-quarter 2015 results that rode the back of strong demand for larger-screen iPhones, a double-digit growth in Mac shipments and better-than-expected growth in emerging nations like greater China. The company's earnings surged 47% on a year over year basis on a 30% rise in revenues.

The Core of Apple

The past year has been remarkable for Apple, with a number of product innovations, new strategies and new highs. The company witnessed an ever-rising demand for its new iPhone that lifted it to altogether different levels.

However, the strong demand was not only the result of smart business strategies but innovative and superior products as well. The launch of iPhone 6 and 6 Plus in the year not only brought the company on par with major "phablet" makers like Samsung, HTC and LG but allowed it to crush them.

Furthermore, the company is set to launch a number of novel offerings in the recent future like the much-awaited Apple Watch. The SmartWatch is expected to come with a range of innovative features ranging from making payments with Apple Pay to doubling up as a fitness device and more.

This apart, earlier this week, the company also teamed up with First Solar Inc. ( FSLR ) for the purchase of solar power worth $850 million. This deal is another major step by the company to strengthen its core. The solar farm will be big enough to provide the required electricity for powering all Apple set-ups in California including stores, offices, headquarters as well as the data center. This is not only environment-friendly but will save significant costs for the company, making it even more profitable.

Such initiatives are likely to have long-term positive impacts for the company.

Our Take

Apple had witnessed 3.6% growth in 2014 earnings compared to the prior-year figure. Furthermore, in the year-to-date timeframe, the company's shares have gained nearly 14%.

To top it all, Apple has seen solid earnings estimate revisions for the current fiscal and the next over the past month. Almost 80% of the analysts have revised their estimates upward for this year and 70% of analysts for the next year. Moreover, in the last month, the Zacks Consensus Estimate for fiscal 2015 has risen over 8% to $8.41 while fiscal 2016 estimates climbed more than 4% to $9.05.

We believe that there is a lot more to this Zacks Rank #2 (Buy) company.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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