Apple Launches New Products in Time for New CEO

In this episode of Motley Fool Hidden Gems Investing, Motley Fool contributors Tyler Crowe, Matt Frankel, and Jon Quast 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, they review earnings from Chewy & Casey's General Store' as well as what makes a good acquirer.

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This podcast was recorded on Sept. 10, 2026.

Tyler Crowe: 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 Crowe. Today, I'm joined by longtime Fool contributors, Jon Quast and Matt Frankel. Guys, we're going to get into, obviously, we have the new product [inaudible] 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 posts results somewhere between OK and good, and the stock falls precipitously after. It's been a pretty common theme this particular quarter, I feel like we've been talking through earnings results. 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. Guys, we're going to start with Chewy first. What did the market see that they didn't like, and did it line up with your thoughts on the earnings report?

Jon Quast: Tyler, you look at Casey's, you look at Chewy's, and I think that these stocks are down for different reasons, even though the narrative is pretty much the same as somewhere between OK and good. Starting with Chewy, 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 OK for Chewy, 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 Chewy, it had decent sales growth on a year-over-year basis, but you look at the quarterly numbers. Compared to last quarter, Chewy did experience a small pullback in its sales. In particular, the auto ship sale. 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 these locked-in loyal members, seeing a slight 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. To see that small pullback in the Chewy sales on a quarterly basis is a little bit concerning.

Matt Frankel: 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. Not only that, 1.9%, that's lower than the rate of inflation. On a real basis, you can say that Chewy sales actually declined. 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, people spend money on that. It's a recurring theme this earning season, that we're seeing 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 people pull back on that. That's the number that really concerned me. It's not profitability, as Jon said. The stock's down big year to date because investors are not willing to pay for Chewy's exceptional margins at a time when top line growth is decelerating.

Tyler Crowe: The theme here for Chewy, it's hard to say Chewy's discretionary retail. Like you said, people spend money on their pets. Maybe they're going from the premium cat food down to the bulk warehouse cat food, I guess, would be the way of putting it to pull back on spending a little bit. But it is slightly more discretionary than, say, food, convenience store purchases, and things like that. We saw something similar at Casey's General Stores. 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 staple purchases in the form of convenience stores, gas, takeout pizzas, and things like that for Casey's versus, to your point, this slight discretionary aspect to what Chewy does.

Matt Frankel: With Casey's numbers, the headline numbers are really deceptive. You wouldn't realize how similar these companies' earnings reports were. On the headlines, 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 have soared. That's the real non-discretionary part of Casey's business. People have to put gas in their cars no matter what. 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 food and things like that. That was up by 3.2% year over 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. With Chewy, there's some discretionary components. There's the non discretionary fuel and 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.

Jon Quast: Well, and to that, I would add that Chewy 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, 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 a valuation of 30 times earnings a handful of times. 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. A lot of expectations running high with Casey's stock, and then to 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.

Tyler Crowe: I think you hinted at it a little bit in your answer, but I want to put you both on the spot as we assess these earnings reports and think about stocks to buy and stuff like that. Given the choice between the two of these companies right now, where they are, Chewy's, Casey's General Stores, which one do you see as the better buy right now?

Jon Quast: Well, I'll jump in first there and say that I think that Chewy is the better buy here of the two. I'm really optimistic on Chewy. I really like the business that it's built. I do believe that its customers truly love the business and 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 healthcare 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 company. To me, it's really overpaying for that, and I'm a little bit concerned about that. I'm not a fan of the acquisitions, but I do believe in the long term sustainability of the company.

Matt Frankel: See, I was going to say Chewy as well until you said horse marketplace. But no, I still have to go with Chewy. 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 PetSmart. Compared to the inside sales at Casey, I think that Chewy has a more resilient business.

Tyler Crowe: Certainly something worth following. 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.

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Tyler Crowe: 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. In the case of CEO John Ternus, it does look like the hurdle’s pretty high because he's taking over for Tim Cook at Apple. When a company gets a new CEO, that new executive often tries to make some early splash or make an impression on its customers and shareholders. It appears that Apple's new CEO John Ternus, 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 the routine updates we've seen for the iPhone 18 and things like that.

Now, I don't want to say this is a knock on the business, because it is an extremely profitable business that's been growing. 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. Guys, I want to take this to you. After 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?

Matt Frankel: Let's put this into perspective here. 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. If Apple figures that product out, maybe, analysts generally think the duo is going to account for about 5%-10%, depending on the analyst of Apple's iPhone sales in the 2027 fiscal year, which is what we're in now. 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 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 call i