Apple Earnings Preview: Killer Quarter Ahead

Apple will report holiday quarter results in less than three weeks. Today, the Apple Maven kicks off earnings preview coverage, starting with an overview of current Wall Street estimates.
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Today, the Apple Maven leaves behind the turn-of-the-year topics of conversation (elections, Apple Car, portfolio strategy for 2021) to start focusing on the upcoming earnings season.

The Cupertino company is scheduled to release fiscal first quarter 2021 results on Wednesday, January 27. The Apple Maven will cover the event via Live Blog. Check out last quarter’s coverage for a taste of what to expect at the end of this month.

What Wall Street expects

As usual, I will tackle Apple’s big earnings day in parts. Today, I will look at what Wall Street currently expects of Apple in the holiday quarter, at a high level. Over the next few weeks, I will single out each major business segment and discuss them in more detail.

According to Stock Rover, consensus estimate for revenue growth in fiscal first quarter is just a bit above 11%. If achieved, this would be quite an improvement over last quarter’s 1% top-line increase.

Earnings per share, or EPS, is estimated to come in at $1.39. At these levels, the bottom-line climb over fiscal 2020 would also hover around 11%. See table below.

Apple Maven’s observations

Consensus revenue of $102.7 billion suggests, in my view, that analysts anticipate Apple’s quarter to be quite solid, as total sales exceed the twelve-digit mark for the first time ever (i.e. $100 billion or more). It also points at the best quarterly growth rate in revenues since fiscal 2019, at least.

Keep in mind that the iPhone represented exactly half of total revenues last fiscal year. Now consider how smartphone sales tanked in the most recent quarter, due to the delayed timing of the iPhone 12’s release. Much of those “lost sales” from fiscal fourth quarter should surface this time, driving the double-digit revenue increase.

The simplified model below depicts what Apple’s P&L would probably look like, should both revenues and earnings per share climb by 11% as currently predicted. To be very clear: these are not my estimates, but a pro-forma P&L that could justify current consensus.

Because revenues and EPS are both projected to come in 11% ahead of last year’s levels, stagnant margins are also implied in the numbers. Rather, since the share count will likely be 200 million lower, due to the usual stock repurchases, analysts hint that margins should actually decline year-over-year.

Time will tell whether these estimates are accurate. At this point, I believe them to be a little conservative. In future articles, I will explain why this is the case, and share my own estimate for Apple’s financial results.

Stay tuned.

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The data used in this report was 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.

To learn more, check out stockrover.com and get started for as low as $7.99 a month. The premium plus plan that I have will give you access to all the information that went into my analysis and much more.

(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)