Apple (AAPL) is in a very interesting position; one that few stocks will ever reach. Currently, it is at the “victim of its own success” point. This is the point at which investors look at a massive company and consider the fact that they have saturated the market so much that further growth is going to be incredibly difficult. However, there's a bit of a double edged sword hitting the stock. Not only is Apple widely successful, competitors in the tech industry threaten the companies ability to continue moving forward as the leader. This has caused a but of a lull in the value of the stock. As a matter of fact, over the past three months, we've seen the value of AAPL decline by about 3%. However, we're nearing the next earnings release from the company; and if all goes well, it could be just the catalyst it needs. Today, we'll discuss what we'll take a look at what we've seen from Apple earnings in the past, what Analysts are expecting to see from Apple this earnings season, what I think we'll see, and whether or not this earnings report will cause a reversal in the stock. So, let's get right to it.
Apple's Past Earnings Give A Gauge Of What To Expect
The concept that history tends to repeat itself is incredibly important to most investors; and for good reason. In terms of the market, this concept rings true more often than not. With that said, to get an idea of what we can expect to see from earnings and whether or not Apple will beat expectations, it's important to take a look at the company's past performance. That history points out a very good trend. According to Street Insider, Apple has beat expectations throughout the past 7 consecutive quarters with regard to earnings per share. That is a feat that not many stocks are capable of. With that said, history tells us that we're in for positive news from Apple this earnings season.
What Analysts Are Expecting To See From Apple's Earnings
Yahoo Finance reports that the average expectations among analysts with regard to Apple earnings this quarter come in at $1.78 per share; with $2.05 being the high and $1.65 being the low. These expectations insinuate strong year over year growth, but are quite a bit lower than the $2.33 per share produced in the last quarter.
What I'm Expecting To See From Apple's Earnings
In my humble opinion, I have to say that I think analyst opinions with regard to Apple's earnings report are far off from what we're going to see. The concerns analysts have a clear…
- Competition – More competition in the smartphone space is likely to cause a decline in earnings.
- Consumers – Consumer spending in the company's biggest market, the United States, is down and is likely to leak into Apple's earnings.
- Strong Dollar – A strong dollar is also likely to harm the company's ability to produce gains from abroad.
While I understand these concerns, and I do believe that earnings will be a bit lower than last quarter, I don't think that the affect of these issues is going to be as strenuous on the company as analysts are expecting. With that said, I think we're going to see another positive earnings surprise for the 8thconsecutive quarter.
How This Is Likely To Affect The Stock
As mentioned above, Apple has seen less than desirable performance in the market over the past few months. This has brought the price of the stock down by around 3%; making it cheaper before earnings. Considering the fact that I'm expecting to see overwhelmingly positive news on the 22nd when the company releases its report, I think we're going to see massive growth in the stock. The reality is that when investors see that Apple is still capable of beating expectations and producing positivity excitement will likely ensue; driving the price of the stock up from the lows it's experiencing and beginning a reversal in the trend.
What Do You Think
How do you think earnings will affect Apple's stock and why? Let us know in the comments below.
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