Trading Analysis: Apple Earnings Preview
By Colin Cieszynski, Chief Market Strategist and Jasper Lawler, Market Analyst, CMC Markets
After the close, Apple will announce its fourth quarter and holiday sales results which include sales numbers for its latest handsets the iPhone 6 and 6 plus which are expected to take the company closer to overtaking Samsung as the largest global seller of smartphones.
Expectations have risen steadily since Apple issued guidance in the third quarter and so merely meeting the guided numbers could prove a disappointment for many. The expectations for Apple this quarter have risen for a reason, the iPhone 6 has proven very popular with sales in China expected to outstrip the US for the first time.
Apple shares hit the highest level in 2015 on Monday having found a floor around $105 so should earnings do the job, a re-test of all-time highs just shy of $120 appears to be on the cards.
The street is expecting Apple to report EPS of $2.59, up 25% from last year. Sales are expected to be $67B, up 17% from last year.
Last quarter Apple beat the street handily earnings $1.42, above the $1.30 estimate, while Sales of $42.1B beat the $39.9 street estimate.
Apple trades at 17x trailing earnings and 14x forecast earnings so it’s not valued excessively relative to the market or its growth rate.
After rallying through much of 2014, Apple shares have been consolidating in a channel between $105.00 and $115.00 following a December common trading correction. In recent weeks, the RSI has been rising below 50 and recently regained that level to signal an upturn in momentum.
On a breakout, the November high near $120.00 or a measured $125.00 from the current channel could be tested. In a correction, initial support may appear around $108.50 near a 23% retracement of the previous uptrend.