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What to Expect from Apple's (AAPL) Q4 Earnings

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Shares of Apple (AAPL - Free Report) climbed 2.6% during regular trading hours Wednesday as part of a larger market resurgence that saw Facebook , Netflix (NFLX - Free Report) , and eBay (EBAY - Free Report) all climb. Apple’s jump might signal that investors are excited about the iPhone power’s Q4 financial results Thursday. Let’s look to see what they should really expect.

Q4 Overview

Apple recently introduced its new iPad Pros and its latest MacBook Air at a launch event in Brooklyn. In September, Apple CEO Tim Cook and other executives showed off the firm’s new iPhone XR, iPhone XS, iPhone XS Max, and the Apple Watch Series 4. But this new lineup of products will hardly, if at all, show up on Apple’s fourth-quarter earnings results since its fiscal quarter ended on September 30.

Still, Apple’s total quarterly revenues are expected to climb by 16.95% to hit $61.49 billion, based on our current Zacks Consensus Estimate. More specifically, Apple’s total iPhone unit sales are projected to climb less than 1% to reach 46.954 million, based on our latest NFM estimates. Luckily, higher prices look poised to lift total iPhone revenues in a big way.

Apple’s Q4 iPhone revenues are projected to hit $35.651 billion. This would mark a roughly 23.5% climb. Investors should also note that Apple’s expanding services business, which includes Apple Pay and Apple Music, is projected to jump 24% from $8.501 billion year-ago period to hit $10.546 billion.

 

Earnings

Plus, Apple is projected to see its adjusted Q4 earnings soar by 34.8% to reach $2.79 per share. With that said, we still need to know how likely it is that Apple tops our quarterly earnings estimates.

To prepare for this, we can turn to our exclusive non-financial metrics consensus estimate file. The Zacks Consensus NFM file contains detailed estimate data for business segment metrics and non-financial metrics reported by companies. The data is acquired from digest and contributing broker models and includes the independent research of expert stock market analysts.

The Zacks Earnings ESP (Expected Surprise Prediction) compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change.

This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

Apple is currently a Zacks Rank #3 (Hold) that sports an Earnings ESP of +1.35%. Therefore, investors can consider Apple a company that has a solid chance of topping our quarterly earnings estimate. Apple has also beat our quarterly earnings estimates in nine out of the last 10 periods.

Apple is scheduled to report its fourth quarter financial results after the closing bell on Thursday.

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