Apple Earnings Preview

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Investors are on the edge of their collective seats, hoping that Apple (NAS: AAPL) will top analyst expectations for the fifth consecutive quarter. The company will unveil its latest earnings on Tuesday. Apple offers a range personal computers, mobile devices, and portable digital music and video players. The company also sells related software, services, peripherals, and networking solutions.

What analysts say:
 

  • Buy, sell, or hold?: Analysts strongly back Apple, with 37 of 40 rating it a buy and the remainder rating it a hold. Analysts like Apple better than competitor Microsoft overall. Analysts still rate the stock a moderate buy, but they are a bit more wary about it compared to three months ago.
  • Revenue forecasts: On average, analysts predict $29.45 billion in revenue this quarter. That would represent a rise of 44.8% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $7.24 per share. Estimates range from $6.20 to $8.10.

What our community says:
CAPS All-Stars are solidly behind the stock with 96% giving it an outperform rating. The community at large agrees with the All-Stars with 92.1% granting it a rating of outperform. Fools have embraced Apple and haven't been shy with their opinions lately, logging 10,046 posts in the past 30 days. Despite the majority sentiment in favor of Apple, the stock has a middling CAPS rating of three out of five stars.

Management:
Apple's profit has risen year over year by an average of 75% over the past five quarters. The company boosted its gross margin by 2.6 percentage points in the last quarter. Revenue rose 82% while cost of sales rose 74.1% to $16.65 billion from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q3

Q2

Q1

Q4

Gross Margin

41.7%

41.4%

38.5%

36.9%

Operating Margin

32.8%

31.9%

29.3%

26.8%

Net Margin

25.6%

24.3%

22.5%

21.2%

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The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

At the time this article was published

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