Apple Inc. (
is set to report fiscal third-quarter 2014 results on Jul 22. In
the prior quarter, the company posted earnings surprise of 13.70%.
Moreover, the company has posted an average positive earnings
surprise of 6.0% over the past four quarters.
Let's see how things are shaping up for the company in this
Growth Factors this Past Quarter
We believe that Apple's third-quarter results will be significantly
dependent on iPhone sales. Apple is rumored to release its new
iPhone 6 in September, which may negatively impact third-quarter
volumes. Consumers tend to postpone buying the older versions of
the device prior to a new iPhone launch.
However, iPhone sales will benefit from Apple's China Mobile
partnership despite significant competition from Samsung. We
believe that iPad sales will stabilize and improving PC market will
also boost Mac sales in the quarter.
For the third quarter, Apple forecasts revenues to be in the range
of $36.0 to $38.0 billion. Gross margin is expected to be in the
range of 37.0% to 38.0%, while operating expenses are projected to
be within $4.4 to $4.5 billion.
Our proven model does not conclusively show that Apple will beat
earnings this quarter. That is because a stock needs to have both a
and a Zacks Rank #1, 2 or 3 for this to happen. That is not the
case here as you will see below.
Negative Zacks ESP
: Apple has a -0.82% ESP. That is because the Most Accurate
estimate stands at $1.21 while the Zacks Consensus Estimate is
higher at $1.22.
: Apple's Zacks Rank #3 (Hold) when combined with a negative ESP
makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies you may want to consider as our model
shows that they have the right combination of elements to post an
earnings beat this quarter:
Silicon Motion (
, with an Earnings ESP of +33.33% and a Zacks Rank #1 (Strong Buy).
Western Digital (
, with an Earnings ESP of +4.02% and a Zacks Rank #2 (Buy).
F5 Networks (
, with an Earnings ESP of +3.81% and a Zacks Rank #2.
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WESTERN DIGITAL (WDC): Free Stock Analysis
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