Earnings season is underway and for now all the attention is focused square on the financial stocks. For now earnings reports are beating (mostly) and investor sentiment is strong. After the major financial institutions report their results Friday, and going into next week, historically the attention turns to Apple
On Tuesday, July 26th analysts expect Apple to report revenues of $42.03 billion for the quarter, which ended in June 2016. Currently the range by analysts is set with low estimates of $41.16 billion and high estimates of $43.29 billion. But here is the part that everyone will focus on. Apple's EPS (earnings per share) are expected to be $1.39, with a high estimate of $1.52 and a low estimate of $1.23. If Apple meets analyst revenue estimates of $42.03 billion, it would still mean a year over year decline of 15.3%.
Now, Apple beat its analyst estimate for earnings per share last year by 2.2%, when the firm announced EPS of $1.85. Apple also beat the analyst EPS estimate for two of the last three quarters. The problem is that last quarter the company posted EPS 5% lower than the analyst estimate in the second quarter this year.
First the first time in 13 years Apple had to announce its fiscal second quarter results with revenue less than expected. Its revenue of $50.6 billion was lower than the consensus analyst estimate of $51.5 billion. Its EPS was $1.90-lower than the $1.97 that analysts were expecting. Apple's EPS fell from $2.33 in fiscal second quarter 2015 to $1.9 in fiscal second quarter 2016.
The point of all these stats is that the fundamentals of the stock seem to warrant the current performance of Apples shares. While the rest of the market is busy making new highs with heavy volume and much excitement, Apple remains down by over 5% this year. Shares have remained in a range since May, and volume has been steady, but light.
If Apple beats or surprises this earnings announcement it could produce a move that Apple hasn't seen, well, since the prior earnings announcement. There is no doubt that this is the one catalyst that investors and potential investors in the tech giant have been waiting for.
