Apple chose not to offer full guidance for fiscal third quarter again, due to the COVID-related disruptions. But CFO Luca Maestri offered his high-level expectations that help to support analysts’ estimates further below:
Strong double-digit growth in revenues, but the seasonal decline from March should be steeper than usual due to supply chain issues;
Gross margin of 41.5% to 42.5%;
Operating expenses of $11.1 billion to $11.3 billion;
Tax rate of 14.5%.
Figure 2: AAPL Earnings/revenue estimate details.
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Read more from the Apple Maven: Buy Apple Stock Before The Start Of July
History does not always repeat, but it rhymes sometimes – so it may help to look at average price action around earnings day. The following chart presents three bars: the median two-week return of Apple stock (1) before earnings, (2) after earnings, and (3) on any given day.
In the last 20 earnings seasons, Apple share price has surprisingly increased less than average in the two weeks prior to earnings day: 1.1% vs. 1.9%. The range has been wide, however: gains of as high as 10% two quarters ago and losses of as low as -6%.
In the two weeks after earnings, AAPL has risen much more: a median gain of 4.6%. This seems to be at odds with the traditional “buy the rumor, sell the news” dynamic. Maybe Apple investors tend to be more skeptical of results before earnings season, but feel more comfortable committing capital to the stock after the fact.
Worth noting, however, the range of outcomes has been very wide in after-earnings share price action: two-week gains of as high as 20%, and losses of nearly -14%. Volatility and uncertainty, therefore, seem to be the norm in AAPL after the company’s filing of quarterly results.
Figure 3: Median 2-week returns, earnings vs. non-earnings.
DM Martins Research
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