Tim Cook's Last Quarter as CEO Was Apple's Best June Quarter Ever. The Stock Fell Anyway.

Apple (NASDAQ: AAPL) closed the Tim Cook era with its best June quarter ever, with revenue rising 16% year over year to $109.4 billion. The stock still fell as much as 8% in after-hours trading because the market's objections centered on what comes next: supply constraints, rising supply costs, and a share price that had already climbed to about 40 times earnings.

Image source: Apple.

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The quarter itself left little to criticize. Earnings per share rose 29% year over year to $2.02, net income climbed 27% to $29.8 billion, and iPhone revenue jumped 22% to $54.3 billion. Mac revenue grew even faster, up 29%.

The company's gross margin expanded, too, reaching 50.1% against 46.5% a year earlier. Also worth noting, the quarter's earnings included an $0.11-per-share benefit from tariff refunds. Excluding it, earnings per share still grew about 22%.

"Today, Apple is proud to report our strongest June quarter ever, with double-digit revenue growth across iPhone, Mac and Services, and in every geographic segment," Cook said in the earnings release -- his last as CEO. John Ternus takes over on Sept. 1, and Cook becomes executive chairman.

Services, which may have been one reason shares sold off, was the softest of Apple's three biggest revenue categories. Revenue there rose about 12% year over year to $30.7 billion -- a June-quarter record and the category's 12th straight quarter of double-digit growth, but the slowest growth of the three. And the high-margin services business is the line the stock's premium valuation leans on most.

The outlook is almost certainly another reason investors were disappointed. Apple warned that supply constraints will weigh on iPhone, iPad, and Mac in the September quarter, and Cook said the company expects to pay even higher memory costs in the period than it just did, with memory prices rising across the industry. Apple guided September-quarter gross margin to 47% to 48%, down from the 50.1% it just posted.

And then there's the price of the stock. Shares came into the report near their record high, up about 65% from their 52-week low, trading at about 40 times earnings. At that valuation, even the best June quarter in Apple's history arguably just confirms what the market already believed: shares were getting ahead of themselves.

For shareholders, I don't think Thursday's reaction says anything new about the business. Apple grew by double digits in every geographic segment, its installed base of active devices reached another all-time high, and the CEO handoff has been telegraphed since April. The after-hours slide looks less like a business problem and more like a pricey stock taking a breather.

Overall, however, Ternus inherits a company growing faster than it has in years, and a stock already priced for it. I'd keep holding.

Daniel Sparks and his clients have positions in Apple. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.