4 FREE LUNCHES BEFORE APPLE’S REPORT

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On Tuesday after the market close, Apple (AAPL) will release earnings. The consensus estimate is $10.35 for earnings per share and $37.23 billion for revenues.

There is a big variance between the estimates by analysts. The low earnings forecast is for $9.45 a share while the top end is $12.51; for revenue, the low estimate is $34.54 billion, and the high is $41.73 billion.

There is also a big variance in estimates for the next quarter. The low estimate for earnings is $9.18 a share, and the high is $12.53; the low for revenue is $34.18 billion, and the high is $44.15 billion.

Of course, as usual, the breakdown of numbers by product category will drive the price of the Apple stock.

For most stocks, projections drive the price after earnings. Apple is different. I have watched in amazement over the years as analysts dismiss Apple’s projections. The legions of analysts have concluded that Apple has perfected the art of guiding conservatively so that can beat the projections.

At the Arora Report, we have built up an enviable track record partly by following several sets of rigorous guidelines. The following is the set of principles and rules we review before the earnings release of every stock in our portfolio:

What happens next is unknowable with any certainty

Analysts can be diligent and knowledgeable, but in the end it is a guess. Apple is widely expected to launch iPhone 5 in October.

The big question is, “How much have sales of iPhone 4S slowed ahead of iPhone 5 launch?” Apple gives no clues, so the analysts are left guessing. This is the reason behind the big variance in estimates.

See also  WEEKLY STOCK MARKET DIGEST: WHAT PRUDENT INVESTORS NEED TO KNOW NOW

Our channel checks show that the iPhone 4S is selling better than what we modeled three months ago…Read more at MarketWatch

 

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