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 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

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