Full 360-Degree Apple Earnings Preview (AAPL, DELL, HPQ)

Apple Inc. (NASDAQ: AAPL) is set to report earnings after the close of trading on Tuesday and this is being watched perhaps more than any of the other companies out there as far as how to play it.  Apple can be volatile after earnings and shares recently hit a new all-time high in the days ahead of the earnings report.  This report may be our first glimpse of what to expect from PC rivals such as Dell Inc. (NASDAQ: DELL) and Hewlett-Packard Co. (NYSE: HPQ)

Thomson Reuters has estimates of $10.08 EPS on $38.85 billion in revenues (56% earnings growth and 45% sales growth).  Apple often offers guidance and the coming quarter is expected to be $8.03 EPS on $32.04 billion in sales (25% earnings growth and almost 30% sales growth).  Keep in mind that Apple is often conservative on its guidance.

Stern Agee has raised estimates ahead of the report but it should b noted that as recently as Monday the WhisperNumber.com report showed that Apple’s earnings estimates had been showing a whisper trend down to $9.99 EPS from $10.01 EPS earlier.  The whisper numbers are less official but are trader-biased.

A few things to consider.  Apple is on the way to having $100 billion in cash on hand.  Last quarter’s earnings report was the first substantial miss in about five years.  This is the first full quarter without Steve Jobs.  Apple is a company which some investors would like to see either a dividend or some use of this cash arsenal now that Steve Jobs is not in charge.  This is also the first report that includes the full sell-thru of the iPhone 4S.

Shares are still around $424.00 per share and the 52-week range is $310.50 to $431.37 with a consensus price target from Thomson Reuters of $514.98.  If Apple only meets its $35.39 consensus earnings estimate for Fiscal 2012 (September-end) then this stock trades just under 12-times expected earnings.

If you use the monthly options rather than the weekly options, options traders appear to be braced for a move of up to about $16 in either direction.

As far as Apple’s chart, there is a lot going on here as you will see with the stockcharts.com chart below.  Apple recently hit all-time highs just last week and that implies a large breakout pattern.  The problem is that the high was hit and then it has stalled.  One could even argue that the chart is awaiting today’s news because shares are settling in right now just above what was resistance in September around $420 and then a firmer resistance around $425 in October.  The stock has also rallied from a low of about $365 around the end of November for a 16% gain since that time.

Some other issues to consider from fresh and recent articles:

• Motorola patent case narrowed
• Apple was a top brand of 2011
• Apple released its full supplier list
• Apple shares made it yet again on the Top Picks List for 2012 from analysts

JON C. OGG