AAPL – 7 Things Apple Stock Investors Must Know Before Earnings

by Alyssa Oursler | January 27, 2014 11:04 am

AAPL – 7 Things Apple Stock Investors Must Know Before Earnings

As you’re likely aware, Apple (AAPL[1]) will report earnings after the bell today. In today’s action leading up to the report, investors have bid Apple stock up by more than 1% … but the real movement is likely to come after the numbers are released this afternoon.

AAPL AAPL   7 Things Apple Stock Investors Must Know Before EarningsSo what should AAPL stock holders and potential investors keep an eye on in today’s report? Well, with lots of folks covering the Apple earnings report, there’s plenty of fodder floating around.

We rounded up some details that all AAPL followers must know before the release. Take a look:

#1: The Hard Numbers for Apple Earnings

Last quarter, Apple reported revenue of $37.5 billion and a quarterly net profit of $7.5 billion, or $8.26 per share. That Apple earnings number was better than analysts had slated, but still represented a year-over-year drop. This quarter, AAPL is expected to post earnings of $14.09 per share — a 2% year-over-year improvement — on revenue of $57.46 billion — a 5% improvement. Of course, as InvestorPlace contributor Joseph Hargett recently noted[2]:

“As usual, the whisper number on Wall Street hints that expectations may be considerably higher, arriving at $14.31 per share according to EarningsWhisper.com. Remember, expectations can play a critical role in post-earnings reactions by Apple stock.”

#2: Apple Earnings Haven’t Been So Great Lately

While earnings at AAPL fell last quarter, that was hardly surprising — AAPL has been struggling for quite some time. As FactSet put it[3]:

Should Apple report an increase in EPS for Q4 2013, it will mark the first time Apple will have reported EPS growth since (standard) Q3 2012.”

Heck, despite the fact that an increase is expected in today’s report, AAPL still is predicted to be a detractor to earnings growth for the tech sector during the quarter, according to FactSet. Per the aforementioned recent report:

“The blended earnings growth rate for the Information Technology sector is currently 5.9%. If Apple is excluded, the earnings growth rate for the sector would improve to 8.8%.”

#3: But Apple Earnings Look to Be Getting Better

StillAAPL has been showing improvement … and it should last beyond the expected gain in profits for the most recent quarter. As FactSet added:

“It is interesting to note that (this) quarter is the last quarter that Apple is projected to be a detractor to earnings growth for the sector. For all of 2014, Apple is projected to be a positive contributor to earnings growth for the Information Technology sector.”

#4: Apple Stock Is Making a Comeback

Plus, shares of Apple stock have gained over 25% in the last six months, more than four times the gains of the S&P 500. And while AAPL is in the red since the start of the new year, the broader market has fallen almost twice as much. So even though Apple stock has cooled off slightly in recent weeks, it is still riding months of momentum.

#5: Lots of Optimism for AAPL

No wonder Apple stock analysts and investors seem generally optimistic heading into today’s report. Expectations for AAPL earnings have been marching up in recent months, with the current consensus of $14.09 per share representing a 2% increase in expectations during the past 90 days. And Dan Burrows recently noted[4]: “Sales are forecast to hit an all-time high, led by record sales of iPhones.” In fact, per Hargett, “The current consensus is for iPhone sales of 55.3 million units, up 16% over the same quarter last year, though some targets place the number as high as 59 million units.”

#6: All Eyes on China Mobile

Of course, we can’t overlook the China Mobile (CHL[5]) deal — possibly the largest driver of Apple stock recently and the largest reason for big-time optimism. As Burrows explained:

“Investors in AAPL stock are also looking for a lot of optimism in the Apple earnings forecast as the deal with China Mobile gets underway. It’s very early in the partnership with China Mobile, but expectations are high. As noted above, Apple could sell another 20 million iPhones this year thanks to China Mobile. So any color or numbers the company can add in the Apple earnings release will be closely scrutinized.”

#7: Key Levels for Apple Stock

Of course, it’s also important to be aware of where AAPL stock stands from a technical perspective. Right now, shares of AAPL are trading for just over $552. What’s next? Well, Serge Berger laid out two important levels to watch[6]. There currently is resistance around the $557-$558 area, he wrote, adding that “a break above there could quickly bring the stock toward Resistance 2 ($567).”

Also, there is support around $540, “a break below which puts the stock into medium-term neutral territory,” according to Berger.

As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.

Endnotes:
  1. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  2. Joseph Hargett recently noted: http://investorplace.com/2014/01/apple-stock-aapl-earnings/
  3. As FactSet put it: http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_1.24.14
  4. Dan Burrows recently noted: http://investorplace.com/2014/01/aapl-stock-apple-earnings/
  5. CHL: http://studio-5.financialcontent.com/investplace/quote?Symbol=CHL
  6. Serge Berger laid out two important levels to watch: http://investorplace.com/2014/01/aapl-stock-back-neutral-awaits-earnings/

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