Apple Earnings Preview: Fiscal Third Quarter 2009

Apple [[AAPL]] is scheduled to report their fiscal third quarter 2009 results after the market closes on Tuesday, July 21. Based on our analysis, we at EarningsPreviews.com are expecting AAPL to report better than expected results that exceed Wall Street’s consensus expectations.

 

Analyst Expectations

We are forecasting revenues of $8.27 billion and EPS of $1.25. This would represent a 11% increase in revenues from last year’s $7.46 billion in the same period. The current analyst consensus estimates calls for revenues of $8.16 billion and EPS of $1.16. On April 22, the company provide fiscal third quarter revenue guidance of $7.7 – $7.9 billion and $.95 – $1.00 EPS.

 

There appears to be growing anticipation of monster quarter from Apple. Last Friday, Apple-fan Jim Cramer predicted the company will report quarterly earnings that will “blow your socks off.” While Apple has not been completely immune to the recent economic recession, all signs due indicate the company will report stellar quarterly earnings.

 

While there is no doubt that Apple is glad to have Steve Jobs back, possibly one of the biggest stories of recent months was resiliency of Apple even in Jobs absence. The stock price continued to climb, revenues continued to soar and maybe most importantly product innovation continued humming along. Apple has handsomely rewarded investors over the last few years and its strong product portfolio and deferred revenue model are likely to continue satisfy investors in the coming quarters.

 

Share Performance

Since the beginning of the year, Apple’s shares are up an amazing 66%. In 2008, AAPL’s shares fell 57% and badly underperformed the 34% decline in the Dow Jones industrial average.

 

Valuation

Shares are now trading at 22x consensus 2010 EPS estimates. This is a well deserved premium to the relative valuations of their peer group. Apple represents one of the more compelling growth stories in the market today. Despite the major rally in the stock since the beginning of the year, we would anticipate the stock trading higher over the next 12 months.

 

Recommendation: Buy with a $165 price target.

 

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