Today is a big day for Apple Inc. (NASDAQ:AAPL) fans. The company is rumored to launch the new iPhone 6s, along with other products in San Francisco’s Civic Auditorium. Investors should also pay attention as the company’s new offerings could provide renewed sources of growth for its financials, as well as for its stock price.
First, let’s take a look at what we can expect from today’s event.
It is almost certain that Apple will unveil the iPhone 6s at today’s event. According to supply chain leaks, the new phone will have the same design as its predecessor—the iPhone 6. However, many components inside the phone will be upgraded. For instance, the 6s will reportedly be equipped with a faster A9 chip and 2GB of RAM. (Source: TechCrunch, last accessed September 8, 2015.)
The iPhone 6s will supposedly get a solid upgrade on its cameras. At the rear will be a 12-megapixel camera that could also record 4k videos. The front camera will be able to take 5-megapixel pictures and shoot 1080p videos.
The new phone will also come with the force touch feature, which comes from a pressure-sensitive screen. The iPhone 6s will be able to differentiate and uniquely act upon three levels of pressure: a tap, a press, and a deeper press. The new feature is going to change the user experience quite a bit as developers will be able to create new apps that allow three dimensional user inputs.
Apple is expected to give a big update to the Apple TV. The new device will be powered by an A8 processor, which is a huge upgrade from the single-core A5 chip used in the current Apple TV. It will also come with a revamped remote control that is larger and has a built-in touchpad for navigation. Moreover, the Apple TV will support third-party controllers for gaming. Users will also be able to use Siri as the new Apple TV’s navigation tool.
The iPad hasn’t been Apple’s strong suit lately. In the second quarter of 2015, the company sold 10.9 million units of the iPad, an 18% decline year-over-year. According to International Data Corp., worldwide shipments for tablets are expected to fall by 3.8% to 221.8 million units in 2015. (Source: IDC, last accessed September 8, 2015.)
The company is expected to fight the trend with two new tablet products: the iPad Pro and an upgraded iPad mini. The long-rumored iPad Pro is going to be a 12.9-inch tablet featuring a 2732 x 2048 display and will have a similar design to the iPad mini and iPad Air, albeit larger. The larger display will allow users running two apps side by side without any issue. The iPad mini is expected to have a slimmer design and also to receive a chip upgrade.
What it Means for Investors
Apple is one of the most renowned brands in the world with a huge following across the globe. The solid fanbase means one thing: when Apple unveils a new product, people will be lining up for it.
The company, along with its stock price, really took off after the launch of the first iPhone in 2007. Until today, iPhone sales remain the largest source of Apple’s revenue. Moreover, growth has not shown signs of slowdown, even when the global economy is.
In the most recent quarter, iPhone sales surged an impressive 35% year-over-year to 47.5 million units. Strong growth in iPhone sales also boosted revenue in the segment by 59% to $31.4 billion. (Source: Apple, last accessed September 8, 2015.)
With new products being launched, one thing is for sure: these offerings could provide the company renewed sources of growth. However, keep in mind that Apple’s stock price does not necessarily go up on good news. For instance, on the past several dates where Apple held its WWDC event, its stock prices closed lower.
Looking at the long term, however, the company is more than solid. Apple’s stock price closed at $112.21 today, giving it a price-to-earnings ratio (P/E) of 12.96 and a dividend yield of 1.85%. With a decent financial position and strong growth prospects, this kind of value is hard to find in today’s stock market.