Previously known for its applications in the entertainment and gaming industry, augmented reality (AR) has been increasing its foothold in e-commerce, retail, automotive industry, and technology segments. According to Mordor Intelligence, the global augmented reality market is expected to grow at a CAGR of 151.9% over the next six years.
The demand for AR/VR hardware with integrated augmented reality has increased significantly over the past year. Some recent applications include: The use of AR modeling and 3D visualization in surgeries, AR-powered head-up displays in vehicles, AR solutions in e-commerce as well as in-store retailing, photorealistic AR in smartphones, and 3D AR modeling in education should drive the industry’s performance post-pandemic.
Apple, Inc. (AAPL), Facebook, Inc. (FB), and Immersion Corporation (IMMR) are some of the top companies investing in this space. These companies should see significant revenue and earnings growth from these segments in the future.
Apple, Inc. (AAPL)
With a market cap of $2.27 trillion, AAPL is one of the top large-cap stocks in the world. The iPhone maker also designs, manufactures, and markets personal computers, tablets, wearables, and accessories worldwide. It also sells various related services. AAPL’s focus on AR has increased over the past few years and it is rumored that the company could launch its VR headset and AR glasses soon. The stock has gained 65.5% over the past year to close Friday’s trading session at $135.37.
It was reported by Nikkei Asia on February 10, 2021, that AAPL has partnered with Taiwan Semiconductor Manufacturing Company Ltd. (TSM) to develop micro-OLED displays, which it plans to use in its upcoming AR devices. The micro-OLED project is currently at the trial production stage. AAPL also launched its first augmented-reality app for an original Apple TV Plus series, “For All Mankind” on February 12, 2021, to promote the upcoming Season 2 premiere of the alternative-history space drama.
For the fiscal 2021 first quarter ended December 26, 2020, AAPL posted record revenue of $111.44 billion, up 21.4% year-over-year. International sales accounted for 64% of the total revenue. Net sales from the product segment have increased 21% year-over-year to $95.68 billion. Net income has increased 29.3% year-over-year to $28.76 billion and EPS has increased 34.4% year-over-year to $1.68.
A consensus EPS estimate of $0.98 for the quarter ending March 31, 2021, represents a 53.1% improvement year-over-year. Moreover, AAPL surpassed the Consensus EPS estimates in each of the trailing four quarters, which is impressive. A consensus revenue estimate of $76.97 billion for the quarter ending March 31, 2021, represents a 32% rise from the same period last year.
AAPL’s strong fundamentals are reflected in its POWR Ratings. The POWR Ratings are calculated by taking into account 118 different factors with each factor weighted to an optimal degree.
AAPL has a grade of B for Momentum, Sentiment, and Quality. We have also graded AAPL for Growth, Value, and Stability. Get all of AAPL’S ratings here.
The stock is ranked #20 of 52 stocks in the Technology – Hardware industry. This industry is graded B.
Facebook, Inc. (FB)
Founded in 2004, FB develops products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and in-home devices worldwide. The company’s products include Facebook, Instagram, Messenger, WhatsApp, and Oculus. FB also provides Facebook Reality Labs which is an augmented and virtual reality product that helps people feel connected, anytime, and anywhere. The stock has gained 28.4% over the past year and closed Friday’s trading session at $270.50.
In September 2020 the company had announced its plans to release its first pair of augmented reality glasses in 2021. FB has touted AR as the next major frontier for computing and the CEO of the company, Mark Zuckerberg confirmed that it has been working with fashion eyewear company EssilorLuxottica to create the ‘smart glasses’ under Ray-Ban brand name. EssilorLuxottica smart glasses are backed by AR technology.
The company is currently proceeding with the project named Project Aria which includes a collection of different AR technologies, such as a pair of research glasses and wearable controllers that will influence FB’s future AR products.
FB’s revenue increased 33.2% year-over-year to $28.07 billion for the fourth quarter ended December 31, 2020. The company’s daily active users (DAUs) increased nearly 11% year-over-year to 1.84 billion on average and monthly active users (MAUs) increased 12% year-over-year to 2.80 billion. Net income increased 52.7% year-over-year to $11.22 billion. EPS increased 51.6% year-over-year to $3.88.
The consensus EPS estimate of $2.36 for the quarter ending March 31, 2021, represents a 38% improvement year-over-year. Moreover, FB surpassed the consensus EPS estimates in three out of the trailing four quarters, which is impressive. The consensus revenue estimate of $23.49 billion for the quarter ending March 31, 2021, represents a 32.4% rise from the same period last year.
FB’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.
Also, the stock has a grade of A for Quality and B for Momentum and Sentiment. Click here to access FB’s grades for Growth, Value, and Stability as well.
FB is ranked #2 of 67 stocks in the Internet industry.
Immersion Corporation (IMMR)
Founded in 1993, IMMR is a licensing company that is focused on the creation, design, development, and licensing of haptic technologies that allow people to use their sense of touch when operating digital devices. The company is focused on several market segments including mobile devices, wearables, consumer, mobile entertainment and other content, console gaming, automotive, medical, and commercial.
IMMR is powering the DualSense controllers for Sony Corporation’s (SNE) PlayStation 5. SNE and IMMR have a licensing deal due to which IMMR earns a royalty on every controller sold. IMMR also announced a multi-year license agreement with Faurecia on February 2, 2021, providing Faurecia access to IMMR’s haptic technologies and solutions. Consequently, this is expected to help Faurecia develop advanced, interactive haptic user interfaces with the latest innovations from IMMR.
IMMR also signed a multi-year license agreement with Woory Industrial Co. Ltd. on February 12, 2021. Woory Industrial is one of the leading automotive component suppliers in Korea and this agreement allows the company to use IMMR’s haptic technologies for its automotive touchscreens.
IMMR’s total revenue increased 34% sequentially to $7.60 million for the third quarter ended September 30, 2020. Revenue from the royalty and license segment increased 34.7% sequentially to $7.53 million. Net income was reported to be $2.86 million which is an improvement considering the company’s net loss of $1.39 million in the third quarter of 2019. Non-GAAP EPS of $0.15 increased considerably from the third quarter of 2019.
Consensus EPS estimate of $0.24 for the quarter ended December 31, 2020, represents a 140% improvement year-over-year. Moreover, IMMR surpassed the consensus EPS estimates in three out of the trailing four quarters, which is impressive. Consensus revenue estimate of $7 million for the quarter ending March 31, 2021, represents an 11.9% rise from the same period last year.
Over the past year, the stock rallied 91.8% to close Friday’s trading session at $14.92. It is currently trading 10.3% below its 52-week high of $16.64, which it hit on February 10, 2021.
IMMR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.
IMMR has a grade of B for Growth, Momentum, Sentiment, and Quality as well. We have also graded IMMR for Value and Stability. Click here to access all of IMMR’s ratings.
IMMR is ranked #26 of 107 stocks in the Software – Application industry.
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FB shares fell $0.42 (-0.15%) in after-hours trading Tuesday. Year-to-date, FB has gained 0.30%, versus a 4.93% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...
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