Apple, Inc. (NASDAQ: AAPL) is set to release its third quarter 2015 earnings after the market close today. The popular technology company is expected to report earnings of $1.81 per share and gross revenues of $49.3 billion, according the consensus of Wall Street analysts who publish research on the firm.
AAPL shares have traded in a tight range bounded by $135 and $120 since early February. Recent general market skittishness related to Greece and China sent shares to the bottom of this range, only to see them rebound, on volume that expanded by the day, right to where AAPL shares sit now: just a whisper below the all-time high, $134.54.
On Friday, shares of Google, Inc. (NASDAQ: GOOG, GOOGL) staged a breakaway gap out of a long price consolidation. AAPL shares’ current consolidation is about six months long. This is more than long enough to support a move by AAPL to new highs. The impetus for a move like this could come from this evening’s earnings. Watch for AAPL share reaction in this evening’s after-hours session.
Strong AAPL EPS Growth Forecasts
AAPL shares are forecast to report quarterly EPS growth of 41.4 percent this evening and 31.0 percent next quarter. Forecasts call for AAPL EPS growth of 40.8 percent this year and 7.6 percent next year. Over the next five years, AAPL EPS is expected to grow at an annual rate averaging 14.8 percent.
Sales are forecast to increase by 27.4 percent this year to $232.9 billion, and by 5.4 percent next year to $245.55 billion.
The important thing to keep in mind is that these are only estimates for AAPL shares. The range of estimates for 2015 sales is $227.33 billion to $243.0 billion. If Apple reports earnings or sales that are below, or that “miss” estimates, the AAPL shares may fall. If Apple reports earnings or sales that are above, or “beat,” expectations, AAPL shares may rise, as Google shares did this past Thursday and Friday.
Tight Supply Of AAPL Shares
When shares like GOOG or AAPL trade into new high price territory, it is a result of the market having exhausted the supply of available stock. Higher prices are needed in order to induce owners to part with their shares. Once prices “breakout” to levels never seen before, all the shareholders are profitable. There is nobody holding stock with a loss when prices are at an all-time high. It is for this reason that prices can move very quickly after breaking-out and reaching new price highs: they become one-way markets with no sellers. Will we see this with AAPL shares this evening and tomorrow?
As evidenced by the current share price of AAPL, right at all-time highs, there is currently a tight supply of AAPL shares. An Apple second quarter 2015 beat has all the elements in place to send shares much higher. Most important is the reaction of the AAPL market to this evening’s announcement. The current market environment may be one where Apple could miss and the shares still scoot higher — only time will tell.
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