Full 360-Degree Apple Earnings Preview (AAPL)

Apple Inc. (NASDAQ: AAPL) is due to report earnings after the close of trading today.  The consensus Thomson Reuters estimates are $7.28 EPS and $29.45 billion in revenues.  Keep in mind that Apple’s guidance for the current report was about $5.50 on EPS and revenue of about $25 billion. The discrepancy of the consensus estimates being so far above the guidance is because Apple has always had a tact of “under-promising and over-delivering” on its guidance.   

Thomson Reuters has estimates for the coming quarter of $8.98 EPS and $36.63 billion in revenue.

Shares are trading around the all-time highs and this earnings report could have the catalyst to propel the shares signficantly higher or they could go back and take a real breather.  Around $420 today, the 52-week trading range is $297.76 to $422.86.  The consensus analyst target has also risen to nearly $499.00.

Apple rallied on the heels of Google’s earnings report and by now the news of the passing of Steve Jobs has been absorbed. We recently highlighted 12 stocks with more upside to the consensus price targets as well.

The chart needs little analysis with shares back close to all-time highs.  Effectively, anyone who has ever bought Apple is up and many are up big.  The company is even closing in on the $400 billion mark for its market capitalization rate.

By looking at the closest speculative options contracts, it looks as though options traders are only braced for a move of up to $12 to $14 in either direction.

The 200-day moving average is all the way down at $357.30 and the 50-day moving average is down at $387.20.

We have already seen more reports that Apple sold a record number of iPhone 4S sales, we have talk of either already looking at an iPad3 or a mini iPad.  By the way, there is already a mini iPad and it is called the iTouch.

As far as the last report, Apple noted that Gross margin was 41.7% (versus 39.1% a year earlier) and that international sales were up to 62% of total sales.  If you go back a year, Gross margin was 36.9% and international sales were only 57%. 

Apple sold 20.3 million iPhones in the prior quarter, which could be lower as consumers were waiting for the new iPhone. Apple sold 9.25 million iPads and sold 3.95 million Macs during the quarter during the previous quarter.

Now that Apple is permanently in the post-Steve Jobs era, we would like to throw out some notes…

• Apple is on the way to being the first to secure $100 billion in cash;
• Apple could change its stance on M&A;
• Apple could declare a dividend which the street has been calling for;
• Apple could declare a stock split…

Take your guess, it is a new frontier and a new outlook under new leadership.

JON C. OGG