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Apple (AAPL) Loses Market Share in China

Tickers in this article: AAPL

NEW YORK ( TheStreet) -- Apple  market share in China fell from 9% to 5% in the most recent quarter, according to research firm IDC. IDC analysts expect market share to increase with the launch of the new iPhone. Samsung and Lenovo currently boast dominance in China, the world's largest smartphone market.

"Apple is making a comeback," said Jim Cramer in his premium 'Real Money' column . "This represents the retail interests."

And, with far less fanfare than its iPhone event two weeks ago, Apple announced it had updated iMac desktop line. In the third-quarter ended June 29, Apple reported Mac revenue fell 1% to $4.9 billion, with 3.8 million units sold compared to 4 million in the year-ago quarter.

Compared to its recent erratic movement, Apple shares moved within a somewhat tight range today, closing 0.3% lower to $489.10. Overall, Apple slightly lagged the S&P 500 which was down 0.26%.

Goldman Sachs boosted its price target on Apple to $560 from $530, while RBC raised its target on Apple from $525 to $550. Susquehanna upgraded shares to "buy" from "neutral," raising its target from $440 to $625.

TheStreet Ratings team rates Apple as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate Apple a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:
  • Apple's revenue growth has slightly outpaced the industry average of 0.8%. Since the same quarter one year prior, revenues slightly increased by 0.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Apple's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, Apple has a quick ratio of 1.54, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 41.67% is the gross profit margin for Apple which we consider to be strong. Regardless of Apple's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, Apple's net profit margin of 19.53% compares favorably to the industry average.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Computers & Peripherals industry and the overall market, Apple's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • Apple's earnings per share declined by 19.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, Apple increased its bottom line by earning $44.16 vs. $27.67 in the prior year. For the next year, the market is expecting a contraction of 11.6% in earnings ($39.05 vs. $44.16).

Written by Keris Alison Lahiff.