1 Number Apple Stock Investors Should Know Ahead of Earnings

If Apple (NASDAQ: AAPL  ) stock rallies after the company reports earnings on April 23, it'll be because of iPad sales. According to Fortune's survey of analyst projections, the median estimate is 18 million tablets sold, or about 56% more than last year's fiscal Q2 total of 11.8 million. Recent history and industry reports suggest that the iPad Mini could account for the majority of those sales.

Smaller tablets are gaining ground as a whole. Five of the nine most popular tablets listed at Amazon.com (NASDAQ: AMZN  ) were 7 or 8 inches. The Mini ranked ninth, while Samsung's 10.1-inch Galaxy Tab ranked sixth. Various models of Amazon's Kindle occupied the other spots.

For its part, Wall Street is expecting fiscal Q2 revenue to increase 8.9% to $42.68 billion, resulting in $10.13 of profit per share. The company beat earnings estimates in only two of its past four quarters, highlighted by a 10.1% miss in the June quarter, according to data supplied by Yahoo! Finance. Apple stock is down 32% over that period.

Will Apple stock rally following the report? Tim Beyers of Motley Fool Rule Breakers and Motley Fool Supernova weighs in on this question in the following video. Please watch and then leave a comment to let us know whether you would buy, sell, or short Apple stock at current prices.

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  • Report this Comment On April 14, 2013, at 8:21 PM, DanManners wrote:

    Great article! But the competition is fierce. Even Samsung is feeling the heat from Apple and LG as LG copies their smartphone features.

    Tim Cook moves much too slow to help the stock in the short term. He has not made any new in almost 8 months. He said he feels our pain and is looking at new things. Not much comfort there.

    Apple could beat expectations but the problem is the p/e is compressing and even if it starts doing better the stock price won't go up much unless they can show they can innovate successfully. Google went up with Glasses and their a few other things that they were doing that showed they are always trying for the next big thing.

    Apple has stumbled over the last year. With imaps fiasco and management shakeup, investors are nervous. Add in Tim Cooks daily apologies, you have the making of a sub 400 stock price.

    In my opinion, Cook needs to be fired. Rocco Pendola of thestreet.com said the same thing. Cook is no way even close to the great Steve Jobs in his abilities. Cook is way over his head.

    No iTV, bigger screen iphone, buyback or dividend increase, cheaper phone for emerging markets, iphone6 will destroy the stock. If the upgrades on the present lineup are minimal the stock will be way under 400. If the earnings are sub $10 and Junes is sub $8 we will drop to the low $300s. That is my guess.

    If Cook surprises with some cool stuff and does some of the things I listed above, we could be in the mid 500 range. To get to 700 he will need need to hit a cycle as they say in baseball.

    An iphone 6 this year with larger screen. A big buyback and increase dividend to 4%. Cheaper phone and a deal with China Mobile. Cool iphone5s with fingerprint technology. Better ios7 with Ives improvements. Itv and iwatch. We hit 800 or more. Throw in buying Netflix and we wave goodbye to Google as we pass their share price!!!

  • Report this Comment On April 15, 2013, at 12:00 AM, skippywonder wrote:

    @DanManners,

    I see what you're saying (I think), but look at what the stock price has done during Cook's term from when he took over to now. If Tim is responsible for its recent fall then he was also responsible for its run to 700. If he had nothing to do with the run to 700 (even though he had been at the helm for a year) then he has nothing to do with its decline from that mark.

    Tim Cook needs more time to show what he can or can't do. We don't know what Apple is working on.

    But I don't think buying Netflix at its current price would be smart in the least. If there was a time to buy Netflix it was when it was at 60, not now. But Apple doesn't need Netflix. Adding a bunch of employees that don't fit in and inheriting a corporate culture that is headed in a different direction? That is the kind of stuff that will get you booted.

    Finally I have to say it would be ridiculous for Apple to drop to the low 300's. Epically ridiculous. Apple will be announcing that they have more than $150 a share in cash. That number will be near $200 a share by next spring. So what would the forward cash ex PE be on that? 2.5? Even at 30 EPS that would be a cash ex PE of 3. Very unlikely to fall that low before the bargain hunters can't help themselves.

    This dead period of low 400's associated with the compressing PE you rightly point out will be seen in two years as a rare buying opportunity. Apple continues to mint money. The upward pressure on the share price will win out in the end. AAPL will be valued at 2 times cash in a couple years if the stock doesn't move. I see high 500's or low 600's by the end of 2014 easy.

    And you're right, if the iwatch is a hit, look out.

    I am in the give Cook more time camp. Let's see if he can release a hit before we call for his head.

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