Following a Q4 earnings report that disappointed the market, Stifel analyst Aaron Rakers took a closer look at Apple Inc. AAPL 0.93%’s 10-Q to get to the bottom of what’s going on at the company.

While Apple’s forex hedging gains fell steeply once again during Q4, the company recorded its highest operating margin in China in several years.

Throughout 2015, Apple was well-prepared for forex headwinds, but the most recent quarter is an indication that the company will face a much more challenging environment in 2016. Apple’s 10-Q indicates only about $515 million in pre-tax forex hedging gains in Q4, down from $806 million in Q3 2015 and $1.4 billion in Q2 2015.

But the news wasn’t…

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