Apple Inc. (AAPL) Earnings Preview Reveals Interesting Trends

Apple Inc. (AAPL) Earnings Preview Reveals Interesting Trends

Apple is set to release it Q3 earnings results on July 21, and after some recent stellar performances more good news is expected for the consumer electronics giant. The outstanding popularity of its iPhone range in particular continues to ensure that Apple retains its position as one of the most prominent brands on the planet. And although some reports have suggested that the Apple Watch has sold less units than Apple had anticipated, its early performance should ensure that Apple profits continue to impress the city and investors.

Apple Watch estimates

According to initial estimates, Apple has shifted around 5 million Apple Watch units at an average price circa $500. Of course, calculating the average unit price for the Apple Watch is far more complex than for previous Apple device releases, as there are all manner of strap and face options available to consumers. With the base unit costing a mere fraction of the $10,000 Apple Watch Edition, there are many different demographics of Apple Watch purchases, but it seems based on early figures that the Apple Watch has been a qualified success.

Peter Lynch: How Investors Can Find Their Edge

Peter LynchPeter Lynch was one of the best growth investors of all time. As the Magellan Fund manager at Fidelity Investments between 1977 and 1990, he averaged a 29.2% annual return. Q1 2021 hedge fund letters, conferences and more The fund manager's investment strategy was straightforward. He wanted to find growth companies and sit on them Read More

AAPL iPhone estimates

While the Apple Watch has performed perfectly adequately for Apple, the iPhone continues to go from strength to strength. Apple has indeed acknowledged this itself by upgrading its estimate of the number of iPhone units that it will sell during 2015. The corporation has reportedly ordered 90 million iPhone units to be manufactured before the end of 2015, and this latest sentiment is reflected in the latest iPhone unit forecasts.

Apple iPhone sales forecasts have been increased to around 48 million, which compares to the 43 million that was expected previously. The Apple smartphone attracts an average unit price of $646, which is slightly reduced on the previous quarter. This has been attributed to increased European sales, with the European iPhone typically retailing for less than the United States version.

China now key Apple (AAPL) marketplace

A breakdown of Apple figures also indicates that China is becoming an even more critical marketplace for Apple. It was reported in recent months by the market analysis association Gartner that Apple had exceeded Samsung in terms of pure volume of mobile sales. Market analysts asserted that the primary reason for this was the popularity of Apple in China, and now the latest Apple earnings preview indicates that the world’s most populous nation is now extremely important to the world’s most successful consumer electronics company.

iPhone sales in China now total almost 30 percent of the overall units for the iPhone 6. According to early estimates, Apple’s China sales now exceed the United States, underlining the importance of this marketplace for the consumer electronics giant. The upgrade in Apple stock for the forthcoming iPhone 6s has been largely attributed to its success in China, and with Chinese consumers strongly identifying with the Apple brand, this shows no signs of abating.

Apple (AAPL) overall sales

Overall, Apple can expect sales totalling in the region of the $50 billion, with a gross margin of just under 40 percent and an EPS of $1.84. This would represent yet another record for Apple, as the California-based company continues to strengthen its vice-like grip on the consumer electronics marketplace.

The latest quarterly figures from Apple backup what was a sensationally successful 12 months for the corporation in 2014. During this period, Apple’s market capitalization topped $700 billion for the first time. This was a big achievement in itself, but further magnified by the fact that no other corporation has ever achieved a market cap in excess of $700 billion.

Apple also recorded the highest ever single-quarter profit in Q4 2014, and as mentioned previously also overtook Samsung at the head of the mobile device sales listings. This was a fantastic yearly result for the corporation, and augmented previous landmarks achieved by Apple such as being named as the most powerful brand on the planet by the authoritative Interbrand survey. To put this last achievement into perspective, Coca-Cola had topped the Interbrand listing for the previous 15 years.

Apple (AAPL) earnings trends

However, although earnings news seems to be extremely rosy for Apple, there are still some interesting data points and trends to mull over. Firstly, the earnings figures from the main suppliers of Apple were relatively weak, with no evidence of growth year-on-year. This suggests that the sales of the iPhone are becoming more front-end loaded that they were previously.

Secondly, although the strength of Apple in China is generally a positive trend for the corporation, it could be asserted that there is an over-reliance on the world’s most populous nation. With iPhone sales in China now significantly outpacing those in the United States, a slow down in the Chinese economy that could result from the recent stock market downturn would be significantly adverse for Apple. At present, many analysts believe that this scenario is unnecessarily negative, and the prospect of this is not being factored into many predictions. Nonetheless, this is a factor that could impact on the performance of the company in the foreseeable future.

Based on the latest earnings figures, the long-term forecast for Apple remain very strong. Apple’s market capitalization has already reached $737 billion, and it should touch $750 billion in the next few weeks. The share price of the corporation has also been heading in a steadily upward trend over the last 18 months, and general forecasts are that it will increase around a further 10 percent over the next few months and reach a $140 valuation.

The next year will unquestionably be an important one for Apple Inc. (NASDAQ:AAPL), as it attempts to prove to the city that the Apple Watch is a viable new revenue stream and the iPhone 6S launches. Apple also reportedly has several new product niches in the pipeline, and thus this will be a critical period for the company. However, for the time being all earnings information appears to be extremely positive for the company ahead of its official July 21 announcement.

No posts to display