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My investing philosophy mostly centers around the Value discipline and GARP- Growth at a Reasonable Price. This blog includes commentary on market conditions as well as fundamental analysis of specific companies. Graduated from Rhodes College with a degree in Business with concentration in Finance & Marketing. Currently working on obtaining the CFA designation. Previously worked in Mortgage Trading for a major bank. Use MS Excel extensively for developing investment models, notably valuation models based on DCF methods.

Wednesday, April 16, 2008

Apple's Q2 EPS Estimate Trend

Apple Inc. (nasd:AAPL) is scheduled to release earnings for Q2 2008 Wednesday, April 23rd. Below is some brief information on the historical trend of consensus estimates and reported earnings. This is a primer for a follow-up analysis I am currently working on- which I plan to publish within the next couple of days.

Data from Yahoo Finance reports 26 total estimates for Q2.
High Estimate: $1.18
Low Estimate: $ .94
Mean Estimate: $1.06

Q2 Previous Yr: $ .87
Apple Guidance: $ .94

Yr/Yr Growth:
Analyst Estimate:22%
Apple Guidance: 8%

The estimates have changed little in the last 60 days. Three months ago, the consensus stood at $1.09 until Apple announced its Q2 guidance of $.94 which caused analysts to trim their forecasts. Within the last month, the mean estimate ticked up one penny.

In February, there was a wave of negative reports: suggesting lower iPod shipments, weak iPhone and Macbook Air sales. The reports would support the lower than expected guidance, questioning whether Apple is really low-balling again this quarter.

In March, a flood of reports suggested iPod sales weren’t as dismal as previously thought. Also, there were indications that Mac sales were very strong. The iPhone SDK release renewed enthusiasm and a shortage at retail stores hinted at healthy sales. Even with positive industry data reports on Mac shipments, the consensus estimate only rose a penny.

I believe the consensus is a bit low, calling for 22% Yr/Yr EPS growth. I predict Mac sales are up more than 50% to over 2 million units. The general trend of Mac strength should be further bolstered by the new MacBook Air and upgrades to MacBook and MacBook Pros released during the 2nd quarter. The year-ago quarter saw no new introductions or upgrades to the Mac line. The Street is forecasting Mac unit sales of 1.9 million.

click to enlarge

Below is table of selected individual estimates reported by Zacks.

Table below depicts Apple’’s earnings history reported by quarter. Percentage changes are displayed for Yr/Yr change for individual quarter, Yr/Yr change for last 4 quarters, and sequential change for last 4 quarters.

Apple’s EPS announcement history- Estimate vs Actual and 1 day change in share price.
Last year, Apple beat Q2 estimates by 36% and shares rose 3.7%.

Stock price activity around announcement dates.


Patrick said...

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Also, if you are willing to provide a link to that would be much appreciated.

My Personal Finance Blog said...

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