The most valuable company in the world beat on earnings and missed on revenue.

The services segment is showing growth just as I expected. The iPhone unit sales slowed in-line with my expectations.

With $256 billion in cash, increased dividends, and the upcoming phone I am a buyer of the stock in any sell off.

Guidance was fair for Apple’s slowest quarter and management also increased its share buyback program.

The iconic technology company, Apple, reported its 2017Q2 earnings on Tuesday with high expectations from investors. The stock is up over 25% over the last six months and the company had a high bar in terms of expectations. The iPhone maker reported earnings of $2.10/share versus expectations of $2.02/share. However, on the revenue side Apple missed expectations by $190 million as they generated $52.9 billion. I estimated Apple would report earnings of $2.06/share and revenue of $52.8 billion. This got me a ranking of 67 out of 651 analysts covering the stock on Estimize. I also estimated that the company would sell 50.5 million iPhones.

Looking at the quarter in more detail Apple grew its revenue by 4% in comparison to last year. The company sold 50.8 million iPhones versus expectations of 52 million. I did not expect to sell the company to beat estimates on iPhone sales as most customers eagerly wait for the new phone. The company also sold 8.9 million iPads and 4.2 million MacBooks. The hidden gem that is overlooked by investors is the services revenue segment. Services revenue grew 18% as it generated $7.04 billion. The Other products segment (Apple TV, Watch etc) had $2.87 billion in revenue. Looking at revenue by region all the regions had revenue growth except for China which was a bit concerning. The weakness in China might be a sign that Samsung might be stealing back market share with the S8 Galaxy. We will have to see what happens when the new iPhone generation comes out in Q4.

In terms of guidance, management gave an alright outlook as expected. This quarter and the next quarter are slower quarters for Apple. Apple now has a cash balance of $256 billion. Management increased its share buyback program by $35 billion to $210 billion and increased the dividend by 10.5%. These are things I like and expect for Apple they always return cash to shareholders. Maybe if repatriation happens Apple will be able to make a sizable acquisition.

Overall, for me this quarter was what I expected in terms of iPhone sales and revenue. China is a bit of a concern for me but with the new iPhone generation coming I see sales there picking up. The media and skeptics will say iPhone sales slowed and that it’s a hardware company blah blah but overlook services revenue growth. The company trades at 17x earnings while the market is trading at 25–26x earnings. The stock is still undervalued for me and I am buyer if it goes below $140/share.

Grade: This was an A- quarter for me.

Disclosure: Cresco Investments has a position in Apple Inc.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This article is intended for information, engagement & entertainment purposes only, and is not to be construed as investment advice or direction. Investors are strongly encouraged to perform due diligence and/or consult with their financial advisor.