Motley Fool Money - Apple Launches New Products in Time for New CEO

Episode Date: September 10, 2026

While Apple has continued to be a great business, it’s been a minute since the company issued a new product that made us go “wow”. With new CEO John Ternus coming from the hardware side of the business, it comes as little surprise that one of the first things it announced was a major change to the iPhone, the iPhone Duo. Matt, Jon, and Tyler break down how this launch could impact the bottom line and whether this is a sign of what Apple will look like under Ternus. Plus, Chewy & Casey’s General Store earnings and what makes a good acquirer. Have a question? Email us; [e-mail] Tyler Crowe, Jon Quast, and MAtt Frankel discuss:- Chewy’s earnings- Casey’s General Store earnings- Apple’s new iPhone Duo- New CEO, new Focus?- Mailbag: is acquisition a good strategy? Companies discussed: CHWY, CASY, APPL, AJG Host: Tyler CroweGuests: Jon Quast, Matt FrankelEngineer: Dennis Golin Disclosure: Advertisements are sponsored content and provided for informational purposes only. The Motley Fool and its affiliates (collectively, “TMF”) do not endorse, recommend, or verify the accuracy or completeness of the statements made within advertisements. TMF is not involved in the offer, sale, or solicitation of any securities advertised herein and makes no representations regarding the suitability, or risks associated with any investment opportunity presented. Investors should conduct their own due diligence and consult with legal, tax, and financial advisors before making any investment decisions. TMF assumes no responsibility for any losses or damages arising from this advertisement. We’re committed to transparency: All personal opinions in advertisements from Fools are their own. The product advertised in this episode was loaned to TMF and was returned after a test period or the product advertised in this episode was purchased by TMF. Advertiser has paid for the sponsorship of this episode. Learn more about your ad choices. Visit megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

Apple has a new product. Does it have a new corporate direction? Motley Fool Hidden Gems Investing starts now. Welcome to Motley Fool Hidden Gems Investing. I'm your host, Tyler Crow, and today I'm joined by longtime full contributors, John Quas, and Matt Frankel. Guys, we're going to get into, obviously, we have the new product reliance as Apple. We're going to get into the mailbag. But before we get started, stop me if you've heard this story already.

A company post results somewhere between okay and good and the stock falls precipitous. after. It's been a pretty common theme this particular quarter, I feel like, as we've been talking through earnings results. And we could have done this for a few companies that have reported in the past, I don't know, 36 hours or so, but let's focus on two. Online pet retailer Chewy and good old brick and mortar convenience store Casey's general stores. Both of them saw at their peaks about double digit declines after reporting earnings. So guys, we're going to start with Chewy first. And what did the market see that they didn't like and did it line up with your thoughts on the earnings report? Well, Tyler, you look at

Casey's, you look at Chewys, and I think that these stocks are down for different reasons, even though the narrative is pretty much the same as somewhere between okay and good. Starting with Chewy, I mean, you do look at the bottom line numbers. That's not the problem here. These bottom line numbers look pretty good. The profitability, the margins, that looks okay for Chooey, nothing really to worry about in this area. It's maintaining that gross margin in particular, and that's really key for a low margin marketplace such as this. But Chooey, you know, it had decent sales growth on a year-over-year basis, but you look at the quarterly numbers. So compared to last quarter, Chooey did experience a small pullback in its sales. And in particular,

the auto ship sales. So a lot of its customers just have it set up. where they're going to receive a shipment from Chewy on a schedule. Those are supposed to be kind of these locked in loyal members. Seeing a slight quarterly or quarter over quarter dip in those numbers is somewhat concerning because there really isn't seasonality in the pet care business. Your cat needs to eat food regardless of the quarter, right? So to see that small pullback in the Chewy sales on a quarterly basis is a little bit concerning. Yeah, and I mean, to that, one number that stood out to me,

their net sales per active customer. It was up 1.9% this quarter. That's down from a growth rate of 4.6% in the first quarter. And not only that, 1.9%, that's lower than the rate of inflation. So on a real basis, you can say that chewy sales actually declined. So customers are not spending more. And that's concerning to me more on a macro level. I don't know about you guys.

I have two dogs. There are a lot of things I would cut back on before I stopped buying treats and all kinds of goodies for my dogs. You know, people spend money on that. So it's a kind of a recurring theme this earning season that we're seeing, you know, a more discount-heavy environment. We've seen that with a lot of the apparel companies.

We've seen consumers pulling back on discretionary spending. Now, obviously, your pets have to eat, but things like getting them a new leash every few months, that's a discretionary expense. And we're seeing, you know, people pull back on that. So that's one, that's the number that really concerned me. It, you know, it's not profitability, as John said. The stock's down big year to date because investors are not willing to pay for Chui's exceptional margins at a time when top line growth is decelerating.

So the theme here for Chui, and this has been pretty common with a lot of, it's hard to say Chui's discretionary retail. Like you said, people spend money on their pets. Maybe they're going from the premium cat food down to the, you know, kind of bulk warehouse cat food, I guess would be the way of putting it to kind of pull back on spending a little bit. but it is slightly more discretionary than, say, like food, convenience store purchases and things like that. And we saw something similar at Casey's general stores. So what is the common thread here, at least in the earnings report for Casey's, that we saw a similar earnings reaction for what I would say is kind of like staple purchases in the form of like convenience stores, gas, you know, take out pizzas and things like that for Casey's versus, as to your point,

this slight discretionary aspect to what Chewy does. Yeah, and I mean, with Casey's numbers, the headline numbers are really deceptive. You wouldn't realize how similar these companies' earnings reports were. So on the headlines, I mean, Casey's revenue was up 23% year-over-year. Earnings were up 28% year-over-year. It was all fuel. Tyler, you're an energy guy. You know how much fuel prices of sword.

You know, that's the real non-discretionary part of Casey's business. People have to put gas in their cars no matter what. So fuel margins exploded year-over-year. That's where that earnings beat came from. when you look inside the stores, same store sales on the inside sales. That's like food and things like that. That was up by 3.2% year every year. That was a deceleration from a 4.3% growth rate a quarter ago.

You can make a case that that's a little bit ahead of inflation. But people aren't spending as much on the discretionary side of the business. And kind of like with Chewy, there's some discretionary components. There's the non-discretionary fuel and, you know, certain convenience items. but there is a lot. When we stop at a convenience store, my kids want candy. We don't have to buy that. But people are cutting back on those type of expenses more and more,

and that's really what is worrying investors with both of these companies. Well, and to that, I would add that Chooey actually looks like a decent value here, trading at roughly 14 times forward earnings. But a big reason that Casey's is down, Matt, as you mentioned, kind of more what has been the historic profit driver is the inside sales, the food business that it has. But you look at the stock since the year 2000. Casey's has only touched 30 times earning, a valuation of 30 times earnings a handful of times. And that's just brushed up against that 30 times. Usually it trades around 20 times its earnings or even less. In 2026,

it has traded above 40 times earnings and has even touched 48 times earnings right before it released this earnings report. That is roughly double its long-term valuation average. So a lot of expectations running high, high, high with Casey's stock. And then to kind of have that softness in what is traditionally the profit driver of the business, it's not surprising to see the stock get cut big time here. I think you kind of hinted at it a little bit in your answer, but I want to put you both on the spot as we kind of assessing these earnings reports and thinking about stocks to buy and stuff like that. Given the choice between the two of these companies right now, where they are, Chui's Casey's General Stores, which one do you see as the better buy right now?

Well, I'll jump in first there and say that I think that Chooey is the better buy here of the two. I am really optimistic on Chui. I really like what the business that it's built. I do believe that its customers truly love the business and kind of that personalized care that they give it. I will say I'm not a huge fan of some of the acquisitions that the company has made recently. It has made some acquisitions in more of the pet health care space.

And I think that's smart. It hasn't quite paid off yet the way that management really hoped it would. I would hope that that would be a long-term driver for the business, but it hasn't materialized yet. More recently, it acquired a horse, online marketplace kind of a company. And to me, it's really overpaying for that. And I'm a little bit concerned about that.

So I'm not a fan of the acquisitions, but I do believe in the long-term sustainability of the company. See, I was going to say Chewy as well until you said horse marketplace. But no, I still have to go with Chewy. You know, as I said, I'm a pet owner. Only pet owners understand how resilient this type of spending is. People treat their dogs like they're their babies, even when it comes to discretionary purchases,

we can't get out of there without buying three bags of treats every time we go to Pets Mart. Compared to the inside sales at Casey, I think that Chewy has a more resilient business. Certainly something worth following. I mean, one of the things we have been talking about is a theme here, I think, in 2026 has been. The consumer getting squeezed a little bit,

and to that point of the durability of both of these companies, it seems like it's getting tested a little bit more in this year than we have seen in years past. Coming up after the break, we're going to talk about Apple's new product launch and how that may be signaling some changes to the company going forward. This show has been going on for a long time, and one of our former colleagues, Bill Barker, used to have this good saying. It's good to come in under low expectations when you come in as a new CEO.

Maybe coming in and trying to follow in the footsteps of somebody really good can be a hard hurdle to jump over. And in the case of CEO John Turnus, it does look like the hurdle is pretty high because he's taking over for Tim Cook at Apple. And when a company gets a new CEO, that new executive often tries to make some sort of early splash or make an impression on its customers and shareholders. And it appears that Apple's new CEO, John Turner's, his splashy move is probably the biggest change to the iPhone in years. The company debuted the iPhone duo at its most recent product launch. event, along with some updates to the Apple Watch, a new Apple Watch Ultra coming out, as well as some other products and some kind of the routine updates we've seen for like the iPhone 18 and

things like that. Now, I don't want to say this is a knock on the business because this is an extremely profitable business that's been growing. It's just, it's been on a trajectory that's pretty consistent for a long time. And it hasn't really released a product that could alter the company's trajectory. So guys, I want to take this to you. after kind of seeing the product release that we saw with iPhone Duo, it's a nearly $2,000 phone at the base level. Could this be like the product we haven't seen in years that could actually move the needle differently for Apple?

So let's put this into perspective here. So foldable phones are not new. This is not a new AHA invention. They've actually been on the market in the U.S. for seven years now. I've seen one in the wild. One, my neighbor has a foldable Samsung phone. they're essentially a rounding error for every company that offers them so far. No one's been able to successfully get the market's interest in this.

Now, a lot of it was the initial build quality. The first few generations of them, they would fall apart. My neighbor's phones had to be replaced twice for similar issues. So if Apple figures that product out, maybe, analysts generally think the duo is going to account for about 5 to 10%, depending on the analyst, of Apple's iPhone sales in the 2027 fiscal year, which is what we're in now. So even the bull case is assuming about a 10% share of its revenue. It doesn't need to be a smash hit to make investors happy.

It's not going to be their new iPhone moment, which that's fine. But the overall, the launch of that combined with the other two, that wasn't the only thing they announced. They announced the iPhone 18 Pro and I think the Pro Plus or whatever they called it. There's no base pro yet. So the average selling price of Apple phones could be higher, which I think is the big takeaway here. And you're right, they haven't had an iPhone moment at a while, so this is not going to be it. I mean, there's a difference between building a beautiful product and being a product that is actually going to make a big difference in the company. I will say that this seems to be a quite

beautiful product. You look at the engineering on the hinge in particular. It seems like Apple really pulled out the stops to make that an impressive part of the phone. Also, the screen itself, to not have a increase. That is just kind of one of those Apple touches that you'd expect. But to Matt's point, I mean, going back in history, the iPhone events used to be very exciting. And I think it's because each new generation was truly a new step forward in what it could do and some of the features that it had. It just makes sense in an early product history that each new step is going to be a large step. Those steps keep getting smaller and smaller. And I think that's why kind of the oxygen has been sucked out of the room for the Apple launch events.

Look, I don't see this being a big needle mover, as Matt alluded to. This is maybe a high-end product that some people will use, and it is beautiful, but to really capture something that is going to be exciting for investors, you're really going to have to have a new product category, I believe. Maybe that's in a portable AI device. What exactly that looks like? I don't even think that the consumer knows yet what it wants in a portable AI device. I don't think that Apple knows what it's going to offer people yet, but that would be one possible area.

But we've seen before try to invent a new product category and it's not really going to be a runaway success. The Apple Vision Pro was truly beautiful and a very interesting product, but it's just not really something that consumers into. So it is, it's hard to do. One kind of, I guess, ironic observation I would make is that John Tarnas is supposed to be the product guy. the biggest change from yesterday's reveal could actually be an operational change, the leasing program they're using. You can get a duo for $58 a month at the base level. That's a lot cheaper than it would be to just finance it over 24 months.

I'm a little bit biased. I like Klarna. Klarna is the one powering the leasing program. But this could be the biggest needle mover. One of the things Apple's been kind of wrestling with in recent years is people are hanging on through their phones longer. The upgrade cycle has extended. So a leasing model with a guaranteed upgrade at the end or upgrade availability at the end of your lease term,

guaranteed they'll just take the phone back. It could create shorter upgrade cycles, smoother hardware revenue, and really be the biggest needle mover out of yesterday's release. When they're going to release the big product that everyone's hoping for from John Ternis, I don't know. Tyler, maybe you know better than I do. Well, I mean, one can only hope. I think all of us have been around long enough that,

the initial like Steve Jobs products launches were on par with like a Berkshire Hathaway annual meeting type event where seeing what was coming next was huge. And I will almost say that Apple's a little bit of a victim of their own success here where it's like we expected these great things to come every single time. And now that we're on, I don't know, version 18, 19, 20. There was, they say 18, but there was like a couple. in there that weren't the same number. So I can't remember precisely where we're at in the Apple upgrade cycle. But, you know, after 18, 19 times, the shine starts to wear off a little bit.

I don't think it's a coincidence that we have seen the release of the Mac Mini. I think it's one of the first major overhauls of its personal computer segment in a long time, this iPhone duo, and the ascension of Ternus to the captain's chair at Apple. I know, like you're saying, this may be more of an operational change with the lease thing, but this has been a little bit more of a hardware push than I think we've seen in a while. So for all the good Tim Cook did for the company and its investors, the company's track record was a mixed bag in terms of new products. Like, John, to your point, the Vision Pro was a nice looking product,

but commercial success, jury's still out. So do you think, like, this is still early, what Ternus just took over the world? a couple days ago. But do you think this is a signal that Apple may strategically be changing a little bit, trying to focus more on hardware improvements, new hardware, trying to get back to a jobsian design, you know, new products, delight the customer from that perspective that the company had versus the operational success and the, you know, supply chain, logistics and do all the things that Tim Cook did was good around the edges, but not a lot of pushing the envelope and still in the products.

Well, I mean, so much of what has just been talked about, I mean, Tim Cook was, these don't just launch overnight, right? I mean, a lot of this happened under Tim Cook's watch, probably with Ternis giving a lot of input. But so I wouldn't completely disassociate what we've seen here yesterday with the product release or whenever it was. I wouldn't completely disassociate Tim Cook from that. But, I mean, of course, Apple does want to launch whatever the next big thing is.

Of course, it wants to lead there. Of course, it wants to make the most beautiful one. I do think it's making the right move in investing in its Mac mini business, because local AI is going to be such a big trend in the upcoming years. And so I think Apple is right to refresh there. But look, I would just caution Ternis as he takes over the CEO role. I mean, Apple still does a lot of things right, even if we're not as wowed at the product launch events,

that we used to be. This is still a very powerful company. It's still a company making a lot of money. And I would be careful not to tinker too much with what you have going for you. If you're going to tinker, make it a new thing. Yeah, I'm glad John brought up the physical AI. Apple's, one of their biggest problems and the biggest criticisms investors have had is that they're behind the curve on AI, which they are. And the other side of that is saying that they're not spending $200 billion a year like some of their counterparts are on building this stuff out. Turnus, he said that the iPhone is the best personal device for AI. And he really emphasized that Apple's record of privacy, security, you're really having better, you know, just better build

quality, better, you know, longer lasting devices is the key differentiator. So I'm curious to see how they're going to lean into that. And like you said, this product launch, pretty much everything was developed while Tim Cook was still in charge of Apple. So ask me again at their next big product launch, what the new direction of the company is, because that'll be the one where things were actually developed under Turner's leadership. Well, what's the fun of doing that if we can't make predictions, you know, a few days into somebody's tenure, right? That's the whole point of why we do this.

Make predictions nice and early and see how they turn out later. Coming up after the break, we're going to dip into the mailback. Hey, everyone, just a quick reminder. If you want to get a question at Red on Air, go ahead and email us at Podcasts at Fool.com. It's Podcast with an S at Full.com. I've also left the email in the show description if you need it. Today's question comes from Evan. His thing is, I have a small stake in a microcap drone company that is aggressively acquiring small businesses.

It's done 26 in the past year, and it's one of its primary drivers for growth. For a microcap looking to scale business, how do you view acquisitions as a growth strategy? When does it become a red flag? And what are the benefits or risk associated with acquisition-based growth? There's a little bit of detail here with like microcab drone companies, but stuff like I. I want to focus a little bit more on Evans' question on the acquisition as a growth strategy because it is a type of business that doesn't get as much attention, but often can be either done extremely well or done extremely poorly.

It's a very binary outcome when it comes to acquisition-based growth. So based on that, what are your thoughts on what Evans' question? is here is acquisition-based growth a good thing, or do you try to look more for the organic side? I mean, the acquisition strategy can work. The key question for me is why they're making the acquisitions, you know, 26 and a year is a lot, and how they're paying for it. Are they using cash? Are they continually diluting shareholders to do it? Are they issuing convertible notes, which is really a form of delayed dilution? Are the acquisitions to build out their intellectual property, patent portfolio in a new industry. You mentioned the drone industry. That could especially be the

case here without knowing more about the company. But red flags, just to rattle off a few and then I'll kick it over to John, is one, watch how the share count is growing. If they're making all these acquisitions and tripling their revenue, but their share counts up by 500 percent, that's a net loss for shareholders. Is any other growth coming organically or are these acquisitions fueling all of the company's growth? You know, how much of their balance sheet, or the assets are made up of goodwill and intangibles? Are there related party transactions going on, which is a big red flag and is very common among the microcap companies?

And like I said, what's the funding structure? Convertible notes in particular with early stage microcaps are a red flag for me. Yeah, I'll agree with Matt in what he said, that growth by acquisition strategy can be a good move. And I would just point to one of the greatest ones of all time was Disney buying out Marvel. I mean, Marvel is premier intellectual property, whereas Disney is a distribution platform, if you think about it. So that is a good example of one plus one equals three. Marvel doesn't have the distribution and the production means, but it does have intellectual property.

Disney can acquire an intellectual property and grow it far beyond what Marvel could on its own because of Disney's power in the entertainment business. So that was a good example of an acquisition gone right. But I would say that's more of the exception than the rule. There are so many things that can go wrong with a growth by acquisition strategy. Now, I want to point out that I did, I think I probably could figure out the stock that we're talking about here. Like it's kind of narrowed down the candidates. I did not look up the specific company here and try to Scooby-Doo what company we're talking about here because we don't get personalized investing advice. I would just say I would agree with Matt.

when it comes to a smaller company, it depends. There can be good reasons to acquire other companies, but I would be suspicious more than bullish, specifically because let's say that you're a small tech company. Really, what are you bringing to the table if you're not bringing innovation to the table? If you're a tech company needing to acquire other businesses, to me that is a tell that your product is not as innovative as you need it to be. therefore you have to go out and acquire innovation elsewhere.

To me, that's just kind of a red flag. Or how about a small company that is really a consumer-facing company? Really, in that case, you need to build your brand almost more than anything. And acquiring other companies doesn't necessarily help you build that brand recognition, your mind share in the market. So when you're acquiring other businesses, you're probably overpaying because you have to pay up a little bit of a premium. There's a chance that you're not going to integrate them.

into your business well. There's a chance that you're going to not see the synergies that you're hoping to see. There could be culture issues. There could be saddling yourself with debt, as Matt alluded to. And now you're taking years to kind of pay that down. It's robbing from future shareholder returns. So there's a lot of things that can go wrong. Very few things that can go right. I'd be suspicious with a small cap company acquiring other companies. So Matt and John are a little bit more tepid to sour on the acquisition growth strategy. So I'll just give my two cents because there's actually a small select group of companies that are these serial acquires that have done spectacularly for investors. And one of the things that I have found, at least when looking at

these types of businesses, is finding those in extremely fragmented but probably mature industries, insurance brokers, car dealerships. Companies like, these where there's thousands of players in the industry, probably all like regionals or mom and pops and things like that. And you have this corporate sort of umbrella that you can work from that's like, hey, we've got a cost of capital advantage. We can take all of your back of the house sort of administrative stuff in-house. It's a lot of corporate synergies. And typically when you're buying a mom and pop, maybe when they're retiring, you can probably buy it at a pretty good price and do it that way. So companies that have that playbook have done extremely well. I'm

one that I'll just throw out as a great example of this because I did say insurance broker is Arthur J. Gallagher, A.J.G. Companies like this, it is a very, very niche tool. And there are companies out there that can do it well. Whether or not a $150 million drone company can do it is yet to be seen. But there are companies that have very good track records for it. And seeking out those companies can be good investments over the long term. So I'll, you know, throwing the count, to the red flags we're looking at. Some of the things you can look for that can help out. But that's all the time that we have for today.

As always, people in the program may have interest in the stocks they talk about and the Motley Fool may have formal recommendations for our guest. So don't buy ourselves stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards is not approved by advertisers. Advertisements or sponsor content and provide for informational purposes only. To see our full advertising disclosure, please check out our show notes.

Thanks for producer Dennis Goll and the rest of the Motley Fool team. for Matt, John, myself. Thanks for listening, and we'll chat again soon.