Apple: Countdown To Earnings Day Begins

Daniel Martins

Second calendar quarter earnings season is upon us. Apple is scheduled to deliver its financial results on Thursday, July 30. The Apple Maven will blog about the event in real time, minute by minute, from press release time to earnings call, as I did during WWDC recently.

Apple looks more like a tech and consumer conglomerate than a single company. So, in preparation for earnings day, I will publish not one, but a series of several articles tackling relevant aspects of the Cupertino company’s fiscal third quarter financial results. I start today, exactly three weeks ahead of earnings, with a recap of Wall Street’s expectations.

What experts think of Apple’s quarter

Expectations for the quarter have been much more divergent this time due to the COVID-19 crisis and the fact that Apple did not provide guidance for the fiscal third period. Therefore, the information below will probably change in the next 21 days, as analysts publish their earnings previews and refresh their expectations for the quarter. I will be sure to revisit the topic closer to earnings day.

As it stands now, Wall Street projects a 4% year-over-year decline in revenues as a consensus. If achieved, this number would be nearly 5 percentage points worse than last quarter’s sales growth figure. The estimate makes high-level sense to me, as fiscal third quarter should have been heavily impacted by store closures and the shutdown of Western economies during most of the period.

When it comes to earnings, it is harder to talk about a consensus. Analyst estimates vary from a low of $1.55 in EPS all the way up to $2.47. On average, $2.00 is the benchmark number for now, which would be 8% worse than last year’s comparable EPS.

Generally speaking, the expectations seem to point at soft sales, likely driven by substantially weaker product revenues and stronger service revenues once again. Margins are probably expected to compress, as suggested by worse decline in the bottom line than in the top line. Not even a lower share count that should result from continued stock buybacks seems enough to instill confidence in EPS stability.

The table below shows how consensus earnings estimates have declined over the past 90 days, from $2.15 to $2.00 today, as the impact of COVID-19 made its way into the projections. A less pronounced decline for full years 2020 and 2021 suggests that pessimism tails off as we move further into the future.

Explore more data and graphs

The data and tables used in this report were provided by Stock Rover. I have been impressed with the breadth and depth of information on markets, stocks and ETFs that this platform provides. Stock Rover also helps to set up detailed filters, track custom portfolios and measure their performance relative to a number of benchmarks.

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(Disclaimers: the author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)

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