It is safe to say Apple (NASDAQ:AAPL) is firing on all cylinders from an operational and financial standpoint. And as a result, investors have been handsomely rewarded with shares up nearly 40% over the past year -- not an easy feat for a company whose market capitalization is rapidly approaching $750 billion.
After reporting a quarterly net income record of $18 billion during its first fiscal quarter, surpassing the previous record by $2.1 billion (held by ExxonMobil), Apple went on to report another strong second quarter as ravenous demand from China led the company to an additional $13.6 billion in net income. So halfway through its fiscal year, the company has recorded $31.6 billion in profits.
ExxonMobil still holds the record for full-year profits* at $45.2 billion in 2008 -- you may remember $4 per gallon gas -- but if Apple's torrid pace continues, the oil major may soon lose that title to Apple as well.
This quarter is typically slowest
Apple reports its fiscal third quarter results on Tuesday, July 21st. Compared to the first two quarters, this period should be slower, as is typical with a consumer electronics company. Specifically, sales of its signature product, the iPhone, generally slow during the quarter as many consumers wait unit the newest model is released near the end of the fourth fiscal quarter.
Analysts polled by Thompson Reuters expect the company to report $10.4 billion in net income later this month for fiscal year-to-date earnings of $42 billion, making the approximately $3 billion needed to top Exxon the corporate equivalent of a layup for Cupertino.
Could Apple take the title this quarter?
To be fair, there is an outside chance that Apple will exceed analyst expectations and take the title from ExxonMobil this quarter, as the company generally does outperform expectations. To do so, the company would have to exceed the analyst forecasts by nearly 31% with $13.6 billion of earnings.
However, there are catalysts that could indeed make this the record-breaking quarter -- the iPhone 6 and iPhone 6 Plus continue to exceed expectations. As a new product, Apple Watch demand and profits have been hard to ascertain, but beating net income estimates by 31% is hard when bottom line expectations total 11 figures.
But rest assured Apple fans and investors, it seems inevitable that the company will overtake Exxon this year. Those same Thompson Reuters analysts believe Apple will report $52.5 billion in net income this year. That means $10.5 billion for the fiscal fourth quarter, besting the Exxon total by an astonishing 16%. It may not happen as early as Tuesday, but it will happen.
*Technically, Fannie Mae has the record for full-year and quarterly earnings in 2013, but that was due to valuation allowance gains and directly unrelated to operational performance in that period. As such, ExxonMobil and Apple are considered the full-year and quarterly leaders for net income by most analysts.