Apple (NASDAQ:AAPL) reported earnings the last week of October, and the results were better than expected.

The numbers show that conservative guidance has paid off for the company yet again. There is also the added bonus this quarter that the stock didn't dip once the earnings were announced, which it did last quarter. The question, of course, is whether investors should get in, or does the positive movement have to end at some point?

Motley Fool analysts Dylan Lewis and Sean O'Reilly dig into the company's record-setting quarter and explain why the market shouldn't have been surprised.

Listen to the full podcast by clicking here. A full transcript follows the video.


Sean O'Reilly: Tim Cook's gearing up to have a good Halloween. He has enough money to hand out iPhones to every kid that comes up to his house.

Dylan Lewis: Yeah.

O'Reilly: How was the quarter?

Lewis: Pretty good. They reported earlier this week. Revenue came in at $51.5 billion, earnings at $1.96 per share. Estimates were $50.9 billion for revenue and $1.87 per share in earnings.

O'Reilly: Apple is notorious for undershooting on the guidance though, correct?

Lewis: Yeah. I think under-promise, over-deliver is what you want out of a company.

O'Reilly: For sure.

Lewis: This is 22% year-over-year revenue growth, and one of the interesting things to watch here is, we saw a very nice report last quarter and the stock dipped.

O'Reilly: Right. It was, what, revenue, or guidance? I can't remember.

Lewis: Something that was related to iPhone sales and some of it was related to guidance, but I think it's important to revisit what we said last quarter with this report and the guidance that they provided. Keep that in mind as we move forward with the company. If you remember, analysts expectations were about $51 billion for revenue, and they had issued guidance of $49 billion to $51 billion.

So people were disappointed that the upper limit on that guidance was what analysts were going to be expecting. There's that margin of error where, if they were to miss, then they're going to miss at what they were expecting. You have a little bit of sell-off there. This is something that I pointed out last time we did the show, and I relistened to last quarter's review ...

O'Reilly: Did we sound good?

Lewis: Yeah, we sounded great. We talked about the fact that the last three quarters they'd beaten guidance on revenue and gross margins every single quarter.

O'Reilly: Right. Who cares?

Lewis: They're providing conservative guidance, and I think it's something to keep in mind as we look forward.

Dylan Lewis has no position in any stocks mentioned. Sean O'Reilly has no position in any stocks mentioned. The Motley Fool owns shares of and recommends 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.