Consumer Electronics
Deciphering Apple & Microsoft Earnings Expectations (AAPL, MSFT)
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Apple Inc. (NASDAQ: AAPL) is set to report earnings after the close of trading today, and Microsoft Corporation (NASDAQ: MSFT) is set to report earnings after the market close tomorrow. What we are looking for is a relative performance and key metrics to determine which has more room to run and which may have more defined ranges.
Apple’s recent low close was $83.11 on March 9, so shares have rallied just under 50%since then. Microsoft’s recent low close was $15.15 on March 9, so shares have rallied more than 25% from the lows of six weeks ago. This is actually just the start of it.
The options front shows that analysts are looking for, or are at least braced for, a little larger move in Apple based upon earnings. The May options expirations for Apple show that traders appear to be braced for a move of up to about 5% to 6% in either direction. The May options expirations for Microsoft show that traders appear to be braced for a move of up to about 4.5% to 5% in either direction.
The technicals here are also very different. Apple is now well above the 200-day moving average of $115.60, and the 50-day moving average is $102.62. That same 200-day moving average is still more than 10% above today’s prices and is listed as $21.45, while the 50-day moving average is $17.82. This indicates that Microsoft probably has more defined trading bands in place for longer-term investors, while Apple has more room to run up and down.
Apple Estimates (Thomson Reuters):
Q2-09 Q3-09 FY09 FY10
EPS $1.09 1.12 5.21 5.95
REV$7.96B 8.28B 35.30B 40.38B
Microsoft Estimates (Thomson Reuters):
Q3-09 Q4-09 FY09 FY10
EPS $0.39 0.40 1.74 1.91
REV$14.10B 15.04B 60.78B 61.73B
Apple’s market cap is now $111 billion, while Microsoft’s market cap is $167 billion. Both are expected to be conservative in guidance.
JON C. OGG
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