Apple Inc. Investors Shouldn’t Expect Much This Earnings Season

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Apple Inc. (NASDAQ:AAPL) has been known to deliver big earnings surprises in the past, and the company’s success has driven a frenzy around each new earnings release. This time around, however, Apple investors shouldn’t bet on the company doing anything all that surprising, at least according to RBC Capital Markets analyst Amit Daryanani. A new report on the company suggests that earnings will be in-line and the Cupertino firm will be looking ahead this earnings season.

Tim Cook & Co will release an earnings report for the three months through June on Tuesday July 22. The company’s June earnings releases have, for some time now, been the company’s weakest in terms of financial interest. The third quarter rarely sees the release of a new device or device iteration, and the holiday season is a long way away. This year, according to RBC, will be no different.

Apple set for humdrum release

Apple is expected to show earnings of $1.23 per share for the third quarter of the year according to Wall Street consensus. Revenue is expected to come in at $37.9 billion. The consensus figures are taken from a Businessweek survey of 43 analysts following the company. In the same three months of last year Apple earned $1.07 per share on revenue of $35.3 billion.

RBC expects Cupertino to release figures roughly in line with those expected by Wall Street. Daryanani puts a price target of $100 on the company’s stock and expects most investor effort to be concentrated on the company’s next product cycle rather than its  financials from the quarter that has just ended. Apple is expected to release a new larger iPhone before the end of the year, and the company is rumored to be preparing a wearable computer, which the media has dubbed the iWatch, in time for the holidays.

The RBC report warns that new product lines are not yet priced into its estimates of the company’s performance and says that it will update its models if the company decides to announce something, “we expect new product lines to be announced in 2HCY14, which could move our estimates higher as well” wrote Daryanani. Apple investors will be looking for any evidence of those new products in this month’s earnings release, and there may be some evidence in the numbers.

Apple guidance is key

Analysts and investors will be looking for Apple to update its guidance for the rest of the year in the coming earnings report, and they’ll be studying the changes to form an idea of the company’s hopes for the iPhone 6 and any other products that may arrive this year.

The two most important guidance numbers will be revenue, which will reflect the amount the company sees sales rising on the release of a new product, and gross margins, which will reflect the build cost of any new device the company wants to release. The RBC analysts expects the company’s conference call to include questions about gross margin through new product releases, and questions about the release of the iWatch.

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