Apple Earnings Tomorrow: The Most Important Item to Watch

Though revenue and earnings are important, here's the most critical item investors should be watching when Apple reports results this week.

Apr 22, 2014 at 12:05PM

Apple (NASDAQ:AAPL) will announce second-quarter results after market close on Wednesday. Among the key metrics provided in the report, gross profit margin, earnings per share, revenue, and a possible update to its plan to return cash to shareholders will be closely watched.

But the most important item of all will likely be any forward-looking comments from management. After all, Apple is ultimately a company that succeeds or fails based on product launches -- and all of Apple's major product launches are expected later this year.

App Store TmfiPhone 5c. Apple's business results are tied almost directly to the success of new products. The iPhone accounts for more than half of Apple's revenue and an even larger portion of operating profits.

What's Apple's next big move?
The expectations for this quarter are hardly exciting. Most analysts expect flat revenue growth and very small earnings-per-share growth on a year-over-year basis. With no major product launches during the quarter, Apple lacks any driver to move the needle.

That's why when Apple reports results for the second quarter, the Street will be looking to guidance and forward-looking comments to get a better glimpse at Apple's expectations for the rest of the year. Not only has Apple CEO Tim Cook promised new product categories this year, but the well-connected KGI Securities Apple analyst Ming Chi Kuo believes Apple may launch an iWatch as early as Apple's fiscal 2014 fourth quarter -- the third calendar quarter of 2014.


iPad Air. Author's photo. Beyond an iWatch launch, Ming Chi Kuo expects two new iPhone's with larger displays, a new iPad Air and iPad Mini, and a major Apple TV upgrade in 2014.

Guidance for Apple's fiscal third quarter probably won't be very exciting, either. Not only does Apple typically launch new products closer to the end of the year, but also this year's rumor mill has little to say about the quarter. Investors should hope for at least more of the same: at least flat year-over-year revenue growth and high-single-digit EPS growth. That said, given these lackluster expectations for Q3, any upside in guidance could serve as a catalyst for the stock.

And looking beyond Q2, Apple may provide useful comments for analysts and investors in piecing together expectations for the rest of the year. Sure, it's not typical of Apple to outline plans for future products. But it's also not unlike Cook to provide broad updates on the timeline of Apple's unannounced new product categories.

In Apple's fiscal 2014 first quarter earnings call, for instance, Cook reaffirmed that the company is "absolutely" planning to launch new products in entirely new categories by the end of 2014.

As the end of 2014 nears, perhaps investors will even get a better clue of the broad categories Apple is referring to.

With the lack of clarification so far, any comments at all on Apple's new categories will likely be helpful.

Though it might seem silly to probe for such vague statements from Apple management on Wednesday, it's also likely impossible to understate the potential impact new products in new categories could have on Apple's business. Given Apple's historical success of entering new categories, Cook's promise certainly helps improve the risk profile of Apple stock at these levels.

Any new details that give investors more confidence in these new categories could not only serve as a boon for the company's long-term story but also possibly even a reason for some investors to buy Apple shares.

Apple's next big move and an adjacent investment opportunity
If you thought the iPod, the iPhone, and the iPad were amazing, just wait until you see this. One hundred of Apple's top engineers are busy building one in a secret lab. And an ABI Research report predicts 485 million of them could be sold over the next decade. But you can invest in it right now... for just a fraction of the price of AAPL stock. Click here to get the full story in this eye-opening new report.

Daniel Sparks owns shares of Apple. The Motley Fool recommends and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers