Given the as-yet unproven demand for the Apple Watch, economic weakness in Europe and recent market turmoil in China, will Apple once again be able to pull off a positive earnings surprise this earnings season as it has for the last eight-plus quarters in a row?
Source: Eikon/StarMine
Heading up?
Based on the StarMine SmartEstimate, we’re expecting an upside surprise from Apple (AAPL.O) when it reports quarterly earnings on July 21. Notice that the SmartEstimate has pulled away from consensus over the recent past.
Source: Eikon/StarMine
Tracking the numbers
Among the more recent estimate revisions, there are now four Bold Estimates – the name we give estimates that are from the most accurate 5-star rated analysts and significantly different from the consensus. That consensus (the I/B/E/S mean) is $1.78. The StarMine SmartEstimate is 3.0% higher, at $1.83. But one of these 5-star analysts is now 15.2% above consensus at $2.05.
There have been nine new estimate revisions over the last 30 days, with the average moving up 5.7%. However, that hasn’t helped Apple’s stock price which has declined nearly 6% during the same time.
Source: Eikon/StarMine
The China question
Reuters reports the stock has been under pressure recently due to investors worried about the economic health of China, which is an important market for iPhones. There might be a bright side if more users migrate to the iPhone 6 and Apple gains market share. Samsung issued negative profit guidance a few days ago as a supply shortage has dented its latest smartphone launch.
BlackBerry is nearly irrelevant these days and Microsoft just threw in the towel on smartphone hardware, writing off nearly its entire investment in Nokia. There are fewer and fewer attractive alternatives to Apple. During its last earnings call, Apple CEO Tim Cook explained its 55% iPhone revenue growth with “we’re seeing a higher rate of switchers than we’ve experienced in previous iPhone cycles.” He has a large audience awaiting his next update.
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