Why Apple Inc.'s iPhone 6 Q2 Sales Do (And Don't) Matter

It's good to be Apple these days.

After posting a jaw-dropping, record-setting earnings release last week, Apple stock is once again hovering near its split-adjusted all-time highs with little sign of slowing down.

What could go wrong, right?

One of the chief concerns voiced by some regarding Apple stock, myself included, questions whether Apple can maintain its momentum after the homerun quarter we all knew it would (and did) post. However, according to some sources, Apple is once again in the midst of another monster quarter.

Apple at it again According to several recent reports, Apple remains on track to ship 50 million iPhones in its current second fiscal quarter. That might not necessarily sound like a lot given Apple sold nearly 75 million iPhones last quarter. However, accounting for seasonality, it's an impressive figure.

Source: Apple investor relations, author's calculations

Here, it's all about context. Dropping from roughly 75 million iPhone shipments to around 50 this quarter sounds like an ugly falloff, and it is on the surface. Over the past three years, Apple's iPhone shipments declined on average just 14% from FY Q1 to Q2. Whereas, this year's Q1 to Q2 decline would come in closer to 32% should analysts' estimates prove reliable (I'll let you be the judge of that). The more dramatic decline many expect during Apple's current quarter though probably has more to do with the sheer immensity of Apple's Q1 report, rather than the overall health of the iPhone sales cycle. Here's why.

Source: Apple Investor Relations; * = estimated

Viewed through the lens of year-over-year growth, it becomes more apparent that hitting 50 million or so iPhone shipments would actually represent a fairly strong performance for Apple by essentially matching last year's Q2 growth rate. Especially as investors continually worry that Apple's increasingly massive scale will eventually lead to slowing growth, achieving greater than 15% growth once again actually seems quite impressive.

Run Apple run Obviously, there's still plenty to left to play out in this storyline. Apple's current second quarter is only slightly over one-third completed, so there's still plenty that could go wrong. However, if the company indeed has another relatively strong quarter up its sleeve, it goes a long way to debunk the notion that the first quarter will represent the "high point" in Apple's 2015.

Remember, the on-going iPhone sales cycle is a critical -- but single -- thread in the overall Apple investing thesis, and there are plenty of ancillary growth drivers that should help continue propel Apple stock higher.

I'm on record as rising a skeptical eyebrow at the short-term potential of the upcoming Apple Watch, but continue to maintain that the smartwatch category as a whole holds massive long-term commercial promise. And if there were any company poised to create homerun product in the smartwatch space, rest assured its Apple. There's also the capital return narrative to watch as well. Apple hasn't raised its dividend in four quartersnow even as its overseas cash hoard continue to balloon. It's certainly fair to argue that an imminent dividend increase would help further buoy Apple's current stock price. And with President Obama's recently reigniting the debate on taxing overseas corporate profits, there's even a remote chance that Apple will act to repatriate its hundreds of billions of international cash, which it could then use for any number of return-enhancing activities.

So investors need to remember two key points regarding Apple stock; From nearly every angle, it appears Apple can and will post another impressive quarter of iPhone sales when it reports in a few months' time, and more broadly, even as its easy to be transfixed solely on the iPhone sales narrative, many other growth drivers still exists for Apple stock as well. Rest assured, there's still a lot to like about Apple in the months to come.

The article Why Apple Inc.'s iPhone 6 Q2 Sales Do (And Don't) Matter originally appeared on Fool.com.

Andrew Tonnerfirmly believes that an Apple a day keeps the doctor away, although that's also not why Andrew owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.