Apple Inc. (NASDAQ:AAPL) continues to show a massive decrease in its operating margin

Apple Inc. (NASDAQ:AAPL) continues to show a massive decrease in its operating margin

Apple Inc. (NASDAQ:AAPL) continues to show a massive decrease in its operating margin

Apple (NASDAQ:AAPL) has continued to show a massive decrease in its operating margin (OPM), in the recent quarter. Apple reported OPM of 21.45% in the latest earnings. This is 223 basis points less than the year-ago quarter. It has now delivered a falling OPM in 14 out of the last 15 quarters. This trend is hurting its profits and EPS, making Apple stock more pricey on a valuation multiple.

With the increase in tariffs on Chinese imports, we should see a further decline in OPM. The company would be forced to absorb some of the tariffs to stimulate demand. If Apple’s management decides to move a part of the supply chain into other countries, it will lead to higher cost and fall in margins.

AAPL is betting on new services like video streaming which have a lower margin compared to the App store or licensing business. This move will lead to further shrinking of the margin in the near future which can hurt any bullish sentiment towards Apple stock.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 232.41.

The projected lower bound is: 209.71.

The projected closing price is: 221.06.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 22 white candles and 28 black candles for a net of 6 black candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 42.2043. This is not an overbought or oversold reading. The last signal was a buy 6 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 55.59. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 85 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -68. This is not a topping or bottoming area. The last signal was a sell 1 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 8 period(s) ago.

Rex Takasugi – TD Profile

APPLE INC closed up 1.860 at 220.820. Volume was 14% above average (neutral) and Bollinger Bands were 44% narrower than normal.

Open     High      Low     Close     Volume___
218.430 220.960 215.132 220.820 30,352,686
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 220.22 211.59 190.42
Volatility: 26 35 36
Volume: 30,438,740 29,793,006 29,945,864

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

APPLE INC is currently 16.0% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of AAPL.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on AAPL.O and have had this outlook for the last 31 periods.

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