Analyzing Apple’s Earnings Explosion + Trillion Dollar Milestone
The consumer technology giant Apple (NASDAQ
Based on past Apple earnings announcements, our system suggested the following average outcomes from Apple’s announcement.
As you can see, there are far more earnings “Beats” than “Misses” in the sample from Apple. That’s no coincidence: firms carefully manage their expected to earnings in order to consistently beat them. Another important datapoint: note how Apple has posted strong growth at the 6-and 12- month marks (even after misses). At that length of time, we begin to see the effect of broader market growth (amid a great period for APPL stock), rather than the impact of the news events themselves.
Note, meanwhile, that the impact of Apple’s earnings announcements has not receded past the one-day mark. In fact, they inch up in each of the days immediately following Apple’s earnings beats. This shows us that investors, in aggregate, aren’t trying to sell off the stock after its price is bumped up by positive earnings news.
We would consider purchasing on some stocks’ earnings news events with a one-day hold time, especially those that show a tendency to jump and then fade. But, based on NQ’s data, Apple looked like an excellent candidate for a longer hold (5-days, for instance) for maximized upside.
How did things turn out? Like this:
Just as the data predicted, we’ve seen continued positive momentum from Apple’s earnings release. The action was even more dramatic than usual, with Apple posting a truly outstanding report after months of unease over middling sales numbers for its most expensive flagship cellphone models. Earnings Per Share came in solidly above Wall Street’s estimates, at $2.34 v. $2.17 expected (a 40% YOY increase). Revenues were up 17% YOY overall. As much as improved cell phone sales numbers, investors appear enthusiastic appear enthusiastic about Apple’s aggressive expansion into the services space. Revenue from services is up 31% year over year. This performance is all the more remarkable when considering the rout suffered by other tech giants this week.
Meanwhile, other analysts appear interested in growing synergies between Apple’s consumer product offerings. As reported by MarketWatch, analyst Laura Martin asked Apple CEO Tim Cook whether offerings like the Apple Watch were driving customers to the iPhone or simply benefiting from iPhone’s pre-existing user base. “Both,” Mr. Cook answered, confirming that some customers are “attracted to [the] iPhone because of the Apple Watch.”
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