- Apple reports earnings on February 2, and Apple stock (AAPL) – Get Free Report heads into this important event weaker than usual.
- The Apple Maven discusses some of the key numbers that AAPL investors should keep in mind as they prep for this crucial reporting day.
- Don’t forget to tune in on February 2, after the closing bell, to follow the Apple Maven’s live blogging of Apple’s earnings results and conference call.
Figure 1: Apple: Pay Attention To These Key Numbers On Q1 Earnings Day
Unsplash
(Read more from the Apple Maven: Apple Stock: Are Layoffs On The Horizon?)
Apple’s Earnings Day On The Horizon
Apple reports fiscal Q1 earnings on Thursday, February 2, after the closing bell. As usual, the Apple Maven will cover the event in real-time, via live blog. Make sure to mark your calendars!
I start this quarter’s earnings preview series by talking about some of the key numbers that AAPL investors should keep in mind in preparation for earnings day. Below, we will look at P&L expectations for fiscal Q1 and preview how Apple stock might react to the earnings print.
Apple Stock: Weak Heading Into Earnings
Apple stock heads into earnings season well off its all-time high. Shares currently trade at $135, a solid 25% below early January 2022 levels.
Heading into earnings day, AAPL has underperformed the broad stock indices since the last earnings season. Apple stock has been down -6% in the past three months while the Nasdaq (QQQ) – Get Free Report and the S&P 500 (SPY) – Get Free Report have climbed by +1% and +5%, respectively.
See the three-month chart below (AAPL is the blue line), provided by Stock Rover.
Figure 2: Apple, Nasdaq and S&P 500 returns since the last earnings season.
Stock Rover
What To Expect Of Apple In Q1
There is little doubt that Apple’s fiscal Q1 print will look a bit uglier than investors have become accustomed to seeing from the Cupertino company.
Regarding the key P&L numbers, Apple has already provided guidance. During the fiscal Q4 earnings call, CFO Luca Maestri offered the following outlook:
- Revenue: no specific number, but expect sales performance to decelerate vs. September with 10 percentage points of FX headwinds.
- Gross margin: 43.0% at the midpoint of the guidance range.
- Operating expenses: $14.8 billion at the midpoint of the guidance range.
- Other expenses: $300 million
- Tax rate: 16.5%
For reference, revenue growth in the September quarter was 8% (expect less this time). Gross margin in fiscal Q1 of last year was 43.8% (expect to see a contraction). Opex in the comparable 2022 quarter reached $12.8 billion (expect a sizable 16% increase in costs).
To make the picture a bit blurrier, Apple came out shortly after sharing the guidance above to update investors and analysts. According to the company, it “now expects lower iPhone 14 Pro and iPhone 14 Pro Max shipments than previously anticipated.”
What this means exactly for revenues and the rest of the P&L remains to be seen. But right now, analysts project the following for fiscal Q1, according to Seeking Alpha:
- Revenues of $122.4 billion to decline YOY by -1.3%
- EPS of $1.96 to decline YOY by -6.5%
How AAPL Can Find Support
The consensus figures above are well short of impressive, especially considering how well Apple has done since the start of the pandemic. The chart below shows YOY growth rates in revenues and EPS since the beginning of the COVID-19 crisis.
Figure 3: Apple’s revenue and EPS growht since March 20.
DM Martins Research
But subdued expectations can be the key to unleashing a potential bull run for Apple stock. When the bar is set low enough, even mediocre results can be seen as good news. This is especially true when AAPL has underperformed the benchmark as it did in the past few weeks.
Those who like to keep an eye on the charts might notice that Apple stock seems to be heading into resistance. Either this is bad news for bulls in the short term or a sign that a well-received earnings report could push AAPL through this ceiling as it reaches higher.
Ask Twitter
Apple reports fiscal Q1 earnings on February 2. While analysts have been de-risking their estimates lately to reflect a number of challenges, how do you think the Cupertino company will perform relative to expectations?
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting the Apple Maven)
