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Why Apple (AAPL) Is Up Today

Tickers in this article: AAPL

Update (4:34 p.m. EST): Updated with closing price, day high and low prices, price change and volume information.

NEW YORK (TheStreet) -- Apple rose 2.01% to $557.36, up $10.97 from its previous close of $546.39, at the close of the trading day on Wednesday as the deal to offer its iPhones through China Mobile gets ready to commence.

The stock had a volume of 12,001,374, slightly more than its average volume of 11,391,000. It hit a high of $560.20 and a low of $551.66 for the day.

Apple CEO Tim Cook indicated Wednesday that the company plans to strengthen its ties with China Mobile in order to grow in the world's largest smartphone market by shipments. The deal, which took six years of negotiations, finally allows Apple to offer its iPhones through all three of the China's state-run carriers.

The Wall Street Journal reported pre-orders for iPhones through China Mobile already exceeded 1 million.

Apple also settled its Federal Trade Commission complaint, which argued that Apple did not take enough action to stop children from making purchases on mobile apps without their parents' consent. The FTC announced Apple agreed to refund at least $32.5 million for all unauthorized charges. The company also agreed to amend its billing procedures on its mobile apps to make sure that it receives explicit consent from its customers before it charges them.

The FTC claimed parents did not know that entering their passwords on their mobile devices meant that their children had a 15-minute period to make purchases without the adults' consent or even knowledge. FTC Chairwoman Edith Ramirez said that children accumulated millions of dollars through this method.

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

"We rate APPLE INC (AAPL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. 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, good cash flow from operations, expanding profit margins and attractive valuation levels. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • AAPL's revenue growth has slightly outpaced the industry average of 2.8%. Since the same quarter one year prior, revenues slightly increased by 4.2%. 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.
  • Although AAPL's debt-to-equity ratio of 0.14 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.40, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has slightly increased to $9,908.00 million or 8.45% when compared to the same quarter last year. In addition, APPLE INC has also modestly surpassed the industry average cash flow growth rate of 6.76%.
  • 41.78% is the gross profit margin for APPLE INC which we consider to be strong. Regardless of AAPL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AAPL's net profit margin of 20.04% compares favorably to the industry average.
  • APPLE INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, APPLE INC reported lower earnings of $39.63 versus $44.16 in the prior year. This year, the market expects an improvement in earnings ($43.71 versus $39.63).
  • You can view the full analysis from the report here: AAPL Ratings Report