Here's What The Buy-Side Is Saying About Apple

| About: Apple Inc. (AAPL)

Apple Inc. (NASDAQ:AAPL) is set to report FQ1 2014 earnings after the market closes on Monday, January 27. It's been 30 years since the first Macintosh computer hit the shelves, and since then much has changed. Today Apple continues to be an innovator and has become one of the world's most profitable companies, dominating a variety of technology markets through its MacBook, iPad, iPhone, and iPod product lines.

Last quarter Apple blew analysts out of the water by reporting stronger than expected profit and revenue. On Thursday, close competitor Microsoft (NASDAQ:MSFT) announced its quarterly earnings and posted strong results, beating the Wall Street consensus on profit by 11c per share and beating revenue expectations by over $1billion. Microsoft announced 3% year over year profit growth and 14% yoy revenue growth. Wall Street is expecting Apple to show about a 2% yoy profit growth and 5% yoy revenue growth.

One way that Apple is attempting to expand its growth is by unlocking robust foreign markets. Apple's deal with China Mobile to distribute the iPhone in the world's most populous country could be a game changer, helping Apple to grow its sales at a faster than anticipated rate.

The other news story that's been making waves for investors lately is Carl Icahn's involvement with the company. Icahn is an outspoken activist investor hedge fund manager who buys stakes into companies then tries to shake up the way the company is being managed to unlock shareholder value. Icahn, who has invested $3billion in Apple, is attempting to get Apple to use its stockpiled cash to buy back shares, increased the demand for shares outstanding. This would cause a boost for shareholders but would limit Apple's ability to expand. Apple probably has more cash than they know what to do with, but mobile payment alternatives or online streaming video, where Netflix (NASDAQ:NFLX) just posted monster profit, could be logical avenues for an acquisition.

The information below is derived from data submitted to the platform by a set of Buy Side and Independent analyst contributors.image

(Click Here to see All Estimates for Apple)

The current Wall Street consensus expectation is for Apple to report $14.04 EPS and $57.232B revenue while the current consensus from 170 Buy Side and Independent contributing analysts is $14.36 EPS and $57.796B revenue. This quarter the buy-side, as represented by the community, is expecting Apple to beat the Wall Street consensus on both profit and revenue.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing a small to moderate differential between the 2 groups' forecasts.

By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors, Estimize has created a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market's actual expectations. It has been confirmed by an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus. image

The distribution of estimates published by analysts on Estimize range from $13.00 to $16.00 EPS and $53.000B to $60.000B in revenues. This quarter we're seeing an average distribution of estimates compared to previous quarters.

The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A larger distribution of estimates signaling the potential for greater volatility post earnings, a smaller vice versa.image

This quarter the Wall Street profit consensus inched up from $14.02 to $14.04 EPS while the Street's revenue forecast has increased significantly from $55.546B to $57.232B. Meanwhile the Estimize EPS consensus opened the period at $14.50 and slipped lower to $14.36 while the Estimize revenue consensus has been rising before the report from a low point of $56.947B to $57.796B. Timeliness is correlated with accuracy, and an increase in the community revenue consensus going into the report is often a positive indicator. image

The analyst with the highest estimate confidence rating this quarter is WallStreetBean, who projects $14.25 EPS and $57.800B in revenue. In the Winter 2014 season, WallStreetBean is currently ranked as the 17th best analyst and is ranked 9th overall among over 3,500 contributing analysts. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case WallStreetBean has similar expectations to the Estimize consensus and is forecasting Apple to beat Wall Street's expectations on both EPS and revenue.

Disclosure: No positions.