A Look at Apple's Q2 EPS Estimate Trend
posted on: April 17, 2008
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Apple Inc. (AAPL) is scheduled to release
earnings for Q2 2008 Wednesday, April 23rd. Below is some brief
information on the historical trend of consensus estimates and reported
earnings. This is a primer for a follow-up analysis I am currently
working on- which I plan to publish within the next couple of days.
Data from Yahoo Finance reports 26 total estimates for Q2.
High Estimate: $1.18
Low Estimate: $ .94
Mean Estimate: $1.06
Q2 Previous Yr: $ .87
Apple Guidance: $ .94
Yr/Yr Growth:
Analyst Estimate:22%
Apple Guidance: 8%
The estimates have changed little in the last 60 days. Three months ago, the consensus stood at $1.09 until Apple announced its Q2 guidance of $.94 which caused analysts to trim their forecasts. Within the last month, the mean estimate ticked up one penny.
In February, there was a wave of negative reports: suggesting lower iPod shipments, weak iPhone and Macbook Air sales. The reports would support the lower than expected guidance, questioning whether Apple is really low-balling again this quarter.
In March, a flood of reports suggested iPod sales weren’t as dismal as previously thought. Also, there were indications that Mac sales were very strong. The iPhone SDK release renewed enthusiasm and a shortage at retail stores hinted at healthy sales. Even with positive industry data reports on Mac shipments, the consensus estimate only rose a penny.
I believe the consensus is a bit low, calling for 22% Yr/Yr EPS growth. I predict Mac sales are up more than 50% to over 2 million units. The general trend of Mac strength should be further bolstered by the new MacBook Air and upgrades to MacBook and MacBook Pros released during the 2nd quarter. The year-ago quarter saw no new introductions or upgrades to the Mac line. The Street is forecasting Mac unit sales of 1.9 million.
Data from Yahoo Finance reports 26 total estimates for Q2.
High Estimate: $1.18
Low Estimate: $ .94
Mean Estimate: $1.06
Q2 Previous Yr: $ .87
Apple Guidance: $ .94
Yr/Yr Growth:
Analyst Estimate:22%
Apple Guidance: 8%
The estimates have changed little in the last 60 days. Three months ago, the consensus stood at $1.09 until Apple announced its Q2 guidance of $.94 which caused analysts to trim their forecasts. Within the last month, the mean estimate ticked up one penny.
In February, there was a wave of negative reports: suggesting lower iPod shipments, weak iPhone and Macbook Air sales. The reports would support the lower than expected guidance, questioning whether Apple is really low-balling again this quarter.
In March, a flood of reports suggested iPod sales weren’t as dismal as previously thought. Also, there were indications that Mac sales were very strong. The iPhone SDK release renewed enthusiasm and a shortage at retail stores hinted at healthy sales. Even with positive industry data reports on Mac shipments, the consensus estimate only rose a penny.
I believe the consensus is a bit low, calling for 22% Yr/Yr EPS growth. I predict Mac sales are up more than 50% to over 2 million units. The general trend of Mac strength should be further bolstered by the new MacBook Air and upgrades to MacBook and MacBook Pros released during the 2nd quarter. The year-ago quarter saw no new introductions or upgrades to the Mac line. The Street is forecasting Mac unit sales of 1.9 million.
Below is table of selected individual estimates reported by Zacks.
The table below depicts Apple’s earnings history reported by quarter. Percentage changes are displayed for Yr/Yr change for individual quarter, Yr/Yr change for last 4 quarters, and sequential change for last 4 quarters.
Apple’s EPS announcement history- Estimate vs Actual and 1 day change in share price.
Last year, Apple beat Q2 estimates by 36% and shares rose 3.7%.
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This article has 11 comments:
I often wonder if people would write half the stuff they write if they still had to pay for paper.
Though AAPL always beats estimates, the stock doesn't always go up as in these quarters:
Q1 2008 1.62 EPS estimate vs 1.72 EPS actual AAPL shares at -10.6%
Q1 2007 .78 EPS estimate vs 1.14 EPS actual AAPL shares at -6.2%
Q1 2006 .61 EPS estimate vs .65 EPS actual AAPL shares at -4.2%
Q4 2005 .37 EPS estimate vs .38 EPS actual AAPL shares at -4.5%
Q2 2005 .24 EPS estimate vs .34 EPS actual AAPL shares at -9.2%
If all analysts believe Apple's guidelines, the stock will always go lower after each earnings. Last quarter's guideline was much lower than most analyst are comfortable with, which is fine... if the stock price becomes predictable, how else are you going to make money ;P
I agree with you, stock will go lower if everyone believes Apple's guidance, and the investors know that Apple is conservative. i think last quarter though, Apple's guidance was much lower even after taking conservatism into account, Guidance only represented 8% growth year over year.
I think Apple was just being more conservative that usual due to the lowered visibility in Q2 from seasonality. Throw in a bleak economic picture, becomes difficult to forecast. If earnings are difficult to forecast then certainly the stock price will be impossible to predict. Let alone, stock price is most always impossible to predict, even if one ca accurate forecast earnings, he/she can't forecast investor sentiment. That's a job probably best suited for Miss Cleo
Apple Investor Relations are irresponsible. They need to do one of two things.
1) Give realistic guidance, even if it means missing it and accepting the consequences that come with that. Now, they are intentionally low-balling (that's called lying), and it hurts the stock anyway, as well as their credibility. Excellence in guidance should be measured by how close it matches with real numbers.
2) Stop giving specific EPS and sales guidance completely. This is OK in today's world. Already, there are plenty of other institutions that make that call which are believed more than anything Apple does. Since no one believes Apple, and looks at their Investor Relations as complete assclowns, its to their advantage just keep their mouth shut, like Nokia and some others do.
C'ville
2- Last Q the stock "fell out of the sky" because (a) there had been a long run up, and more importantly (b) the looming financial crisis and the threat of the great Republican Recession.
3- I believe that Apples guidance was indicative of the uncertainty of the time. Please note: the term is "guidance" not "prediction."... They have a right to make conservative guidances. It really is the smart and responsible thing to do. IF the economic downturn had truly affected their sales as much as some people predicted, then the guidance may have been more in line. However, this did not happen, sales did not fall as many expected. So that guidance NOW looks a bit ridiculous. 20/20 hindsight.
Finally - for those of us who look at stocks as Investments rather than as a quick-turn day-trading game, we look to the overall, long-term trend, rather than obsessing over some bumps in the road. (I, btw, do both types of market games) Apple is clearly focused on the long term, and generally has little concern over interim fluctuations.
One of the reasons I like them.
IMHO