Digging Into Apple's 10-Q: China Margins Highest In Four Years

Following a Q4 earnings report that disappointed the market, Stifel analyst Aaron Rakers took a closer look at Apple Inc. AAPL’s 10-Q to get to the bottom of what’s going on at the company. While Apple’s forex hedging gains fell steeply once again during Q4, the company recorded its highest operating margin in China in several years.

Throughout 2015, Apple was well-prepared for forex headwinds, but the most recent quarter is an indication that the company will face a much more challenging environment in 2016. Apple’s 10-Q indicates only about $515 million in pre-tax forex hedging gains in Q4, down from $806 million in Q3 2015 and $1.4 billion in Q2 2015.

Related Link: 5 Apple Suppliers To Buy Instead Of The Stock

But the news wasn’t all bad for Apple. “Greater China OIM% of 41.2% was the highest we have seen since mid-2012 and compares to 38.1% and 39.4% in the prior and year ago quarters, respectively,” Rakers explains.

Despite the mixed results, Stifel remains bullish on Apple’s stock. The firm maintains a Buy rating and $120 price target.

Disclosure: the author holds no position in the stocks mentioned.