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Earnings Season: Time ripe for a bite of Apple?

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Apple shares hit a record-high in extended hours trading after the world’s most valuable company posted better-than-expected earnings. The company also increased its dividend and share buyback programme, which could drive the stock higher, says Saxo Bank’s Peter Garnry.

Apple shares rose to more than USD 135 following the company’s fiscal second quarter results, which saw Apple sales growing 27% to USD 58 billion ahead of expectations of USD 56 billion. The results were driven by a 40% increase in iPhone sales, which totaled 61.2 million handsets.

Another strong contributor to Apple’s revenues was China where sales rose 71% to USD 16.8 billion, overtaking Europe to become the second-largest market in the world for Apple. iPhone sales in China were up 72%, beating US sales.

Apple’s net profits for the quarter were USD 13.6 billion or USD 2.33 per share and better than the USD 2.16 EPS expected by analysts.

Apple will increase its share buyback programme to USD 140 billion from the USD 90 billion announced last year. It will also raise its dividend 11% to 52 US cents a share, payable on May 14. The planned program will run through March 2017. This is likely to drive Apple’s share price up, Garnry says.