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Apple Earnings Preview: Will The Company Drop The Mic Again?

Today, the Apple Maven begins to preview the Cupertino company’s fiscal second quarter financial results. Here is what will most likely impress Apple investors on earnings day, April 28.

Earnings season is fast approaching. Investors in Apple stock should mark their calendars for Wednesday, April 28, and pay attention to afterhours action on Wall Street.

The Cupertino company is expected to deliver an earnings report with strong double-digit growth in revenues and EPS (earnings per share) over easy pandemic year comps.

Today, the Apple Maven begins to discuss the details of what to expect on earnings day. Over the next two weeks, I will dive deeper into each major segment, including the iPhone, services and Greater China.

For full blog coverage of the event and a review of the results, in real time, tune in to the Apple Maven’s channel on April 28, starting at 4 p.m. EST. Apple investors should not miss this one!

"Earnings St." sign

Figure 1: Earnings season sign.

Record-breaking growth

Analysts currently project that Apple will deliver impressive growth figures in fiscal second quarter. Revenues are expected to come in 32% above year-ago levels. Even better, quarterly earnings per share should land more than 50% higher year-over-year.

These estimates suggest that Apple’s quarter will be the best in many years, five at the very least. Growth should be sky-high due to a few factors:

  • The iPhone 12 was launched with delays in 2020, which shifted demand into the most recent holiday quarter. Continuation of the 5G upgrade cycle could propel iPhone revenues this time.
  • The global pandemic is not over yet. Work-from-home and stay-at-home trends will likely still act as tailwinds to fiscal second quarter results.
  • Very importantly, the post-holiday quarter will face easy comps. Last year’s fiscal second period saw revenues barely inch forward, due to the initial impact of COVID-19 disruptions, on top of a second quarter 2019 that had been the worst period of growth since 2016.

What could stand out

It is likely that the iPhone will perform well in fiscal second quarter. The holiday period proved that demand for Apple’s 5G-capable, higher-end smartphones has been strong so far.

It will be interesting to gauge the mix of higher-priced Pro models to lower-priced 12 mini devices. The former has been reported to have greater market appeal than the latter, which could bode well for average prices and margins.

I also expect services to come in hot. In the holiday period, the segment posted its best top-line growth rate of the past five quarters, probably due to more offerings (Arcade, Fitness+) and better pricing arrangements (i.e. Apple One). Momentum is likely to carry forward into the March quarter.

Lastly, two under-the-radar factors could provide an extra boost to the Cupertino company’s P&L. First, Apple could benefit from all its physical locations being open in the US for about one-third of the entire three-month period. Second, some of the fiscal stimulus money distributed in March may have found its way into Apple’s coffers as early as the fiscal second period.

Twitter speaks

I have recently asked Twitter if Apple’s March quarter financial results will impress. I received 70 responses to the poll below, nearly 80% of which were highly bullish.

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(Disclaimers: this is not investment advice. 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)