Will Apple, Inc. Post Blowout Results Again This Quarter?

Apple may be poised to deliver a massive blowout this quarter, one analyst predicts.

Jun 10, 2014 at 5:05PM

In late April, Apple (NASDAQ:AAPL) blew past expectations. The big numbers rode on the success of better than expected iPhone sales, the company's largest and most profitable business segment. Headed into the report, analysts expected Apple to report iPhone sales of about 38 million. Instead, Apple said unit sales were 43.7 million units, up 17% from the year-ago quarter, and beating analyst estimates for iPhone sales by about 15%. The surprise sent the stock soaring.

Iphone

iPhone 5s.

While the consensus estimate for Apple iPhone sales was 38 million, one analyst in particular had a much more accurate prediction of 40.6 million. Even more interesting, her estimates have consistently been more accurate that most other analysts -- especially as of late. Who is this analyst? Morgan Stanley analyst Katy Huberty.

Given her recent accuracy with her AlphaWise survey, I've been looking forward to her estimate for this quarter. Now she has voiced her figure, and it's looking good. According to her survey, Apple will again outdo itself, shipping a whopping 39 million iPhones, or a massive 25% year-over-year boost to last year's figure. The predicted number again suggests big upside to the consensus analyst estimate. The consensus estimate for Q3 is for 35 million iPhones.

In the past four out of five quarters Morgan Stanley's survey has outperformed the consensus analyst estimate. And the AlphaWise survey hasn't been only marginally more accurate. Her survey has predicted results with 380 basis points of greater accuracy, on average.

The impact on Apple's results?
Thirty nine million iPhones would have huge implications for Apple. An outperformance in iPhone sales of 11.4% over the consensus estimate could help earnings per share significantly outperform the consensus, too. And with iPhones accounting for 57% of sales in Q2, outperformance in Apple's largest business segment will carry over to EPS. And its impact on EPS is leveraged because the company is believed to have iPhone gross profit margins as much as 1,000 basis points higher than its corporate average.

Apple Burberry

iPhone 5s. Apple showed off the iPhone 5s shooting a Burberry fashion show. The former Burberry CEO is now heading up Apple's retail business. Investors are hoping she can reinvigorate growth in the important business. Image source: Apple.

The resulting impact could be a year-over-year boost in EPS as much as 15% to 20%. If Huberty is right about Apple's iPhone sales this quarter, the consecutive duo of big year-over-year EPS gains combined with mostly bullish expectations of Apple's product pipeline readying for launch in the second half of 2014, Apple stock could still be offering investors a solid entry point.

Even after the recent run-up in the stock price, Apple trades at a discount to the S&P 500. Apple has a P/E of 15.7 and the S&P 500 trades at 18.5 times earnings. Such a conservative valuation for Apple stock could turn out to be a bargain if Apple can return to a prolonged period of double-digit EPS growth.

Leaked: Apple's next smart device
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Daniel Sparks owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

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.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

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. The show is also heard weekly on dozens of 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. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers