“Apple is set to report its quarterly earnings on July 22. With Samsung having just delivered a less than stellar preliminary report, citing weakness in the low-end and midrange smartphone market, investors seem polarized on what Apple will bring to the table later this month,” Ashraf Eassa writes for The Motley Fool. “Will it tout a beat driven by high-end share gains, or will slowness at that end of the market take its toll on even Apple?”
Eassa writes, “Apple guided to the following: Revenue between $36 billion and $38 billion; Gross margin between 37% and 38%; Other income/expense of $200 million; Operating expenses between $4.4 billion and $4.5 billion; Tax rate of 26.1% At the midpoint of this guidance range, Apple is set for $37 billion in sales and roughly $7.11 billion in net income on operating income of approximately $9.43 billion. For reference, this midpoint figure would represent roughly 4.8% year-over-year revenue growth from the same quarter in 2013 and approximately 3% net income growth.”
“Interestingly enough, sell-side revenue consensus for the quarter sits at $37.84 billion, which implies that the analyst community in general expects Apple to come in at the high end of guidance. In fact, a closer look at the estimate ranges shows that some analysts expect the company to reach $40.05 billion in sales — well outside of management’s guidance,” Eassa writes. “This is a bit of a double-edged sword as the stock price is typically predicated on what “consensus” estimates are (i.e., future expectations), and right now those expectations are pretty high (which is why the stock has had an excellent run this year). This means that if Apple does, say, $37.5 billion in sales (well above the midpoint of management’s guidance) it could still be viewed as a ‘disappointment.'”
Read more in the full article here.