Apple is only a few days away from reporting fiscal Q2 earnings. The Cupertino company is to release its press release and hold a conference call on March quarter results on Thursday, April 28. As always, we will cover earnings day in real time, via live blog.
Ahead of this important date and potential Apple stock (AAPL) - catalyst, the Apple Maven will preview the event over the next few days. We start with a high-level overview of what Wall Street expects of Apple and what some of the main themes might be.
(Read more from the Apple Maven: Is Apple Stock Cheap Today? A Valuation Analysis)
Apple faces tough comps
It will be hard for CEO Tim Cook and his team to impress analysts and investors this time. This is the case because Apple will face very tough comparisons against fiscal 2021 results that were outstanding. See quarterly revenue growth chart below.
The nearly 54% revenue increase delivered this time last year was driven, first and foremost, by 5G-equipped iPhones that were introduced late in 2020. Due to delays in the launch of the new device, quite a bit of smartphone shipments were shifted from the holiday period to fiscal Q2.
The story did not end there, however. Mac and iPad sales increased by an impressive 70%-plus each. Both product categories benefited from the tail end of the pandemic-era lockdowns, as well as a hybrid-style return to office that boosted demand for PCs and tablets.
None of the factors above will be in place this time — although smartphones may still see strength coming from a well-received iPhone 13 and the recent launch of the 5G version of the less expensive iPhone SE.
What Wall Street expects to see instead
Only because the first calendar quarter of 2022 will not be as good as last year’s, it does not mean that Apple’s results will be disastrous., analysts believe that revenues in fiscal Q2 will reach $94 billion, which would represent a respectable growth pace of 5% YOY. Not impressed? The annualized two-year growth rate, in this case, would be a sizable 27%.
On earnings per share, the consensus estimate is for $1.43. The bottom-line growth here would be a much tamer 2% to 3% YOY, but an astounding 50% compounded over the past two years.
Clearly, Apple is expected to perform well in fiscal Q2 regardless of whether the COVID-19 consumption tailwinds have largely subsided. However, the pandemic may have a negative impact on results due to supply chain constraints that could limit product availability and pressure margins.
AAPL stock heads into earnings day weak
Heading into earnings week, investors that are considering buying Apple stock may feel particularly good about one thing: AAPL has de-risked ahead of fiscal Q2 results.
Apple stock nearly touched the $3 trillion mark again as recently as March 29. But since then, the share price has tumbled almost $14 apiece very quickly, to around $165. Apple is now 9% below all-time highs, a step away from entering correction territory.
While recent weakness does not bode well for momentum, it could represent an opportunity for bargain hunters to own AAPL shares on the dip.
Apple will report fiscal Q2 results on April 28, and the stock is one step away from entering correction once again. In two weeks (i.e., a couple of trading days after earnings day), where do you think AAPL will be trading?
(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 Apple Maven)