Jason Schwarz is the author of The Apple Revolution, an e-book.

One of the reasons why Apple's stock was relatively flat after hours Monday was because Wall Street didn't know what to do with the GAAP accounting change. Too many analysts who should have been ready to interpret the data for their clients were left dumbfounded by the huge earnings beat.

Apple begins the day Tuesday with its lowest price-to-earnings ratio in years and as revised 2010 estimates come in, the company will have its lowest forward P/E of the Steve Jobs era. This disconnect won't last long. Over the next year, traders will price Apple stock back up towards its historical norm of a 32.7 P/E.

Philip Elmer Dewitt offers up an easy to understand year-over-year comparison of the numbers:
  • Total sales: $15.68 billion, up 32% from last year's non-GAAP revenue.
  • Earnings: $3.67 a share, up 46.8% from last year's non-GAAP EPS.
  • Profit: $3.38 billion, up 49.6% from last year.
  • Mac sales: 3.36 million units, up 33% year over year.
  • iPhone sales: 8.74 million units, up 100% from last year.
  • iPod sales: 21 million, down 7.6% from a year ago.
  • iPod touch sales up 55% over last year.
  • 50.9 million visitors to Apple's 283 stores, up 9% over last year.
  • Gross margin: 40.9%, up from 37.9% last year.

The only negative in the report was the weak iPhone unit numbers. But were they really that weak? Apple sold 8.7 million iPhones while investors were looking for something in the range of 9.2 million. The iPhone still grew by over 99% year over year.

When you have this kind of growth rate and still fail to meet expectations it tells you a little something about the expectations -- they got too high.

It's like my son running into the house after his basketball game yelling with excitement, "Dad! Guess how many points I scored?" And I respond, "43?" He then says, "Ummmm, actually I scored 26."

There is nothing more deflating than expectations that are too high. The analysts who were way too low last quarter got way too high this quarter. They really have no way of measuring sales so it ends up being complete guesswork.

Investors will quickly overlook the short-term miss because in reality it wasn't a miss at all.
At the time of publication, Schwarz was long Apple.

Jason Schwarz is an option strategist for Lone Peak Asset Management in Westlake Village, Calif. He is also the founder of the popular investment newsletter available at www.economictiming.com. Over the past few years, Schwarz has gained acclaim for his market calls on the price of oil, Bank of America, Apple, E*Trade, and his precision investing in S&P 500 option LEAPS. His book, The Alpha Hunter, is set to be released by McGraw Hill in December 2009.

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