Saturday, July 26, 2014

Apple's Game Of Inches

On Friday, July 25, 2014, Apple’s share price reached a 52-week closing high of $97.67. This was also the highest split-adjusted closing price since September 24, 2012 and within range of the all-time high closing price of $100.30 set on September 19, 2012.

From the closing high of 100.30 on September 19, 2012 to the closing share price nadir of $55.79 on April 19, 2013 to Friday’s closing price of $97.67, it’s been a startling roller coaster ride for Apple’s long-term shareholders. It’s simply a matter of time before Apple’s share price vaults above its previous all-time closing high and begins an ongoing series of new records.

Despite the share price volatility of the past two years, Apple’s growth moving forward will be best seen in sublime advances of technologies and less in sharp spikes and slides in revenue and earnings growth rates that have characterized the past four years of the company’s financial performance.

Apple is engaged in a game of inches and has entered an era that will again reward long-term shareholders for their conviction, patience and grit. 

Apple’s Return To Glory
While much attention has been placed on Apple’s recent 7-for-1 stock split, the share price rise from the closing price on the first day of post-split trading on June 9, 2014 of $93.70 to Friday's closing price represents a share price gain of 4.24%.

However, the share price rise from the closing price immediately prior to the release of March quarter results on April 23, 2014 has been 30.29%. Apple’s return to organic net growth income growth has delivered extraordinary share price gains in just over three months. Apple has now concluded two consecutive quarters of net income growth following a four-quarter slide in underlying profitability. 

The graph below illustrates the company’s net income performance over the most recent nineteen fiscal quarters. Rising net income is and will remain the primary catalyst for Apple’s share price appreciation.