How Will Record iPhone 6s, 6s Plus Sales Affect Apple, AAPL, Earnings?

In all of 2014, Apple Inc. (NASDAQ: AAPL) sold 169.2 million iPhones, according to Statista. Apple sold 173.2 million iPhones in the first three quarters of 2015, and fourth quarter 2015 Apple financial results will be available soon. Apple is scheduled to report its fourth quarter 2015 financial results on October 27. Apple ends its financial year in September. Traditionally, the Christmas season, Apple’s first quarter, is the computer company’s busiest.

The arrival of the iPhone 6s and iPhone 6s Plus was met with “white hot” consumer demand in China, reports Reuters. Apple reportedly delivered combined iPhone 6s and 6s Plus unit sales of more than 13 million in their first weekend. Wall Street analysts had been looking for a range of 12 to 13 million units; Apple’s reported numbers soundly beat these estimates.

Even with Apple beating expectations, their success with the iPhone 6 has left some professional investors concerned that the numbers may be difficult to continue to grow.

“Topping what the iPhone 6 achieved looks like a tall order, even for Apple, with its history of outdoing itself,” John Jackson an analyst with IDC was quoted.

For the current fourth quarter, AAPL earnings per share of $1.88 are expected by Wall Street analysts. These views have changed only marginally over the past 90 days, up from $1.86. The $1.88 EPS number represents 32.4 percent growth.

First quarter 2016 per share earnings are seen growing 4.9 percent to $3.21. EPS of $9.13 is forecast for the full 2015-year, growing 41.6 percent from 2014. AAPL EPS of $9.80 is forecast in 2016, representing growth of 7.3 percent.

Wall Street analysts currently see AAPL EPS growing by 15.5 percent annually over the next five years.

Fourth quarter Apple revenues of $51.1 billion are forecast on October 27. If met, Apple’s full 2015-year sales would total $233.2 billion. Analysts are currently forecasting Apple revenues to grow 5.2 percent to $245.3 billion in 2016.

Apple also holds $34.9 billion in cash and owes $54.4 billion in debt. Apple’s operating margin is 32.2 percent and the company’s profit margin is 22.6 percent. Apple has an outstanding return on equity of 41.2 percent. Apple’s debt to equity is 43.3 percent. Apple shares pay an annual dividend of $2.08, which currently yields 1.86 percent.

AAPL shares closed at $111.04 on Friday, almost mid-way between their 52-week high and low of $134.54 and $92.00, respectively. AAPL stock is down 11.0 percent over the past six month, but up 11.3 percent over the past year.

The most recent sales numbers confirm that Apple has already sold more iPhone units in the first nine months of 2015 than it did in all of 2014. The question is, just how many more? Growth of 5 to 10 percent over 2014 numbers may be perceived as lackluster, where 20 percent plus growth could cause a surge in analysts’ estimates, as well as the stock’s price. Guidance from Apple towards beating iPhone unit sales, EPS, or revenue numbers has the potential to cause AAPL shares to rally.

The 7.3 percent EPS growth currently forecast for next year would not seem to hold much appeal for institutional investors with an appetite for growth. However, should the number be revised to the high-teens or higher, institutional investors could take it as a sign to drive AAPL shares to back to the top of their current range, and possibly higher.

Though Apple had a loyal customer base, shares of Apple stagnated for more than a decade after a period of initial growth. The iPod was the catalyst behind Apple issuing ten consecutive years of outstanding sales, earnings, and share price growth. Apple literally took over the smart phone market once dominated by BlackBerry (NASDAQ: BBRY), as reported by the Inquisitr. The Microsoft (NASDAQ: MSFT) Surface Book, which is seen as being competitive with laptops, is reported to be under strong consumer demand with its recent unveiling.

[Feature Photo by Cole Bennetts / Getty Images]