After a phenomenal 2014 for Apple, the consumer electronics giant is about to announce its earnings information from 2015. Market followers and city analysts alike will be paying extremely close attention to this critical data, as Apple hopes for positive sentiment ahead of the release of the Apple Watch.
Apple breaks barriers
The last 12 months could hardly have gone any better for Apple commercially. After breaking through the $700 billion barrier for market capitalization, and thus becoming the first ever corporation to do so, the fourth quarter of the calendar year was also a monumental success for the corporation. In Q4, Apple recorded the highest ever single-quarter profit by in recorded business history.
It obviously doesn’t get much better than that for any company, and Apple topped it off by recently exceeding its great rival Samsung. According to the technology research firm Gartner, Apple is now outselling the Korean corporation in the mobile marketplace. This is particularly significant as Samsung has always relied on selling large quantities of more affordable devices in the East Asian marketplace. Apple has now closed this gap, experiencing particular success in China, and this has been reflected in its new quantifiable success.
So the omens are good for Apple moving into 2015, but it is easy to forget that 2014 actually began with a sticky period for the company. Apple’s share price fell significantly at the beginning of last year as the city was unimpressed by lukewarm sales figures and unconvinced that the corporation could deliver significant new product niches.
Plenty has changed since then, as Apple stock has very significantly recovered…
…and it is significant that this latest earnings information is coming just ahead of the release of the Apple Watch. This smartwatch perhaps best embodies the efforts that Apple has made to develop new product revenues, an ethos within the company that has been extremely successful.
So what can we expect from the forthcoming earnings information, and will it result in the Apple share price reaching new highs? It would be difficult for Apple to exceed the numbers that it achieved last time out, with the corporation managing to shift nearly 75 million iPhones, while Mac sales and App Store revenue hit new heights as well. This added up to a staggering $18 billion in net profit, while global sales exceeded $57 billion.
Analysts bullish on Apple
However, although topping the performance of the consumer electronics giant over the Christmas period is unthinkable, analysts still expect the company to post impressive results. Earnings estimates for Apple are generally positive, with both Wall Street and Estimize notably shifting their share estimates for the corporation upwards. Wall Street has raised its EPS forecast from $2.09 to $2.17, while Estimize has nudged its estimates upwards 6 percent from $2.13 per share to $2.26.
With Apple having estimated that its earnings will be in the region of $53.5 billion for the current accounting period, again the general consensus is that it has underestimated its potential. The Estimize consensus is that Apple will record earnings in excess of $57 billion from the period, while Wall Street forecasts also top $56 billion. This has been reflected in the Apple share price in daily trading, with the stock inching upwards on trading earlier this week.
These are obviously bullish sentiments for Apple. Estimates earnings can often exceed that of corporations’ projections, but when this occurs in a consensus fashion then it is an extremely strong indicator that the company will indeed outperform his own targets.
It is interesting that Estimize – a fast-growing software platform that uses crowdsourcing to garner earnings estimates from hedge fund executives, brokerages, sell-side and buy-side analysts – has predicted that Apple will post strong results, as this really represents an extremely valuable diversity of opinion. As this cross-sector consensus favours Apple, it seems extremely unlikely that the company will experience a significant boost in it share price when its results are released on Monday.
Apple strategy pays off
Apple has responded extremely niftily to the concerns of investors and the city. Scepticism about the ability of the corporation to create new revenue streams now seems pretty naive and misplaced, as pretty much everything that Apple has touched over the last 12 months has turned to gold.
The consumer electronics giant had always shied away from producing a phablet-sized smartphone, but considering the success that its major rival Samsung had achieved in this field, it eventually relented with the release of the iPhone 6 Plus. This device immediately became a massive success, and it is thought that sales of the iPhone 6 Plus in the last financial quarter have been a significant contributor to Apple’s rosy earnings report.
Additionally, a lot of attention has been garnered by the forthcoming Apple Watch, which is the first ever wearable device that Apple has produced. The smartwatch has failed to hitherto become a truly mainstream device, but this is expected to change with the creation of the Apple Watch. Analysts are predicting that Apple will shift 20 million units during 2015. This can only positively contribute to sentiment surrounding the corporation, and is likely to lead to strong earnings during the next fiscal quarter.
Morgan Stanley positive on Apple
Other analysts are also bullish on the Apple share price. Katy Huberty of Morgan Stanley has suggested that there are several positive signs for Apple ahead of the earnings information release. Firstly, it is expected that Apple will have sold far more iPhones than it has accounted for in estimates. It is predicted that Apple will have shipped between 57 and 58 million iPhones during the last quarter, which is in fact 4 million more than Huberty herself had initially expected.
Huberty also expects that Apple will announced a new cash return program Monday in the $130-150 billion range.
This all adds up to an extremely positive climate for Apple. The prospects of the corporation have changed profoundly over the last 12 months, and with strong data still favoring the fortunes of the company, this is set to continue well into 2015.