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Apple Inc Stock: AAPL Earnings Beats, But Nothing Else to Celebrate

By U.S. News & World Report

Apple Inc (ticker: AAPL), the most valuable publicly traded company in the world, reported fiscal second quarter earnings on Tuesday, and the results were nothing to write home about . Apple stock was down more than 1.5 percent in after-hours trading.

Despite a modest beat on earnings, Apple fell just short on revenue and guidance, while gross margin looks like it’s slowly retreating as well. Overall, not much for bulls to feast on here.

Shares of the iPhone maker had been on an absolute tear leading up to the announcement: as of Tuesday’s close, AAPL was up 27 percent for the year and 57 percent in the last 12 months, easily surpassing the 7 percent and 16 percent returns of the Standard & Poor’s 500 index over those respective periods.

[See: The 25 Best Blue-Chip Stocks to Buy for 2017.]

Apple’s expansion has slowed in recent years from the breakneck growth rates seen in the years after the iPhone was introduced in 2007. But going forward, it has three or four meaningful, major catalysts on the horizon that could keep this stock in elite territory.

Before getting into those, here’s a snapshot of what the Cupertino, California-based tech giant did in its March quarter.

Apple earnings, by the numbers. Fiscal second-quarter revenue came in just below expectations, growing about 4.6 percent to $52.9 billion from $50.6 billion a year ago. Analysts on average were expecting year-over-year revenue growth of 4.8 percent to $52.97 billion.

Earnings per share came in above expectations at $2.10, up 10.5 percent from the $1.90 per share it earned a year ago. Wall Street had expected Apple to report EPS growth of 6.3 percent year-over-year to $2.02 per share.

The company also guided for revenue in the April-June quarter between $43.5 billion and $45.5 billion, or a midpoint of $44.5 billion, barely shy of the $44.57 billion consensus. Apple predicts third-quarter 2017 gross margin will be somewhere between 37.5 and 38.5 percent; its gross margin in the second quarter was 38.9 percent.

Importantly, Apple increased its share buyback program from the $175 billion amount it announced a year ago to $210 billion. It also increased its quarterly dividend 10.5 percent to 63 cents per share, payable to shareholders of record as of the close of business on May 15.

Looking at AAPL’s second-quarter results by geography and device also revealed a few interesting trends.

Unit sales of the iPhone actually fell by 1 percent, while iPad unit sales fell 13 percent. Driving the revenue increase were sales of Macs, as well as revenue from the company’s services and other products segments, which rose 18 and 31 percent, respectively.

[Read: Apple (AAPL) Stock vs. Alphabet (GOOG) Stock: Which Is the Better Buy?]

The next catalysts for AAPL stock. If Apple shares are to continue outperforming over the next few years, investors will likely need a combination of things to come to fruition.

The most obvious and imminent catalyst is the 10th anniversary iPhone, due out later this year. Whether it’s called the iPhone 8 or iPhone X, its sales will be closely analyzed by Wall Street. Many expect this iteration of the best-selling smartphone to have some of the biggest changes to the product in years.

That fact, combined with the auspicious timing of the so-called upgrade supercycle, means the market will be looking for more record iPhone sales in the holiday quarter.

Apple’s capital return program will also be in the spotlight in upcoming quarters. Politics will play an unusually large role in how this plays out, since the details of President Donald Trump’s tax reform bill will determine how much of the over $230 billion in overseas cash Apple repatriates — and how much tax the company will have to pay to repatriate it.

That’s more cash than any other American company has in its coffers, and until Apple can repatriate it at a lower rate, the company will likely continue to use debt to finance its share repurchases and dividend payments.

Clearly, having that cash in hand to return capital to shareholders can only be good for AAPL stock, and it also opens the door for more research and development and, potentially, major acquisitions. In recent years shareholders have become increasingly anxious to see Apple diversify its revenue streams to decrease its reliance on the iPhone, which still accounts for over 60 percent of its revenue.

Finally, if Apple can continue to expand its services and software revenue, that could be a reliable way to grow its earnings at a faster pace for years to come. The margins on Apple’s services business are higher than its device business, so as services become a greater percentage of revenue, AAPL will be able to grow earnings more rapidly.

This dynamic has been one of the core drivers of Amazon.com ( AMZN) shares in recent years, as its high-growth, high-margin AWS cloud business made Amazon reliably profitable, something it had never been in its life as a public company.

[See: 7 of the Best Stocks to Buy for 2017.]

So, while AAPL stock down slightly after Tuesday’s earnings report, the long-term picture for AAPL stock owners can only become clear as the above factors play out.

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Apple Inc Stock: AAPL Earnings Beats, But Nothing Else to Celebrate originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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