Big Tech earnings season is about to kick off. Ahead of it, Apple stock has zipped past $130 per share and has been performing well in the last month: up 12%.
Today, the Apple Maven looks at the past to try to understand the future by asking: how has the stock behaved in the weeks following each of the last four earnings reports?
FY20 Q2 – April 30, 2020
At the start of the global COVID-19 crisis, the Cupertino company reported very modest revenue growth, with service revenues reaching new all-time highs of $13.3 billion. Apple topped analysts’ earnings per share (EPS) expectations of $0.52, surprising by 23%. The results drove investor optimism and showcased share price resilience amid a period of intense business disruption.
Apple’s CEO Tim Cook said:
“Despite COVID-19’s unprecedented global impact, we’re proud to report that Apple grew for the quarter, driven by an all-time record in Services and a quarterly record for Wearables .”
Apple stock fell almost 30% between January and March 2020 due to the first COVID-19 outbreaks. But by fiscal second quarter earnings day, shares were already in recovery mode. After visiting “bear land” in March, Apple stock reached pre-pandemic levels again by June, and kept rising through September.
FY 20 Q3 – July 30, 2020
Apple surprised again. The company disclosed revenues of $59.7 billion, an 11% increase year-over-year. EPS of $2.58 was up 18% year-over-year and 27% above analyst consensus. The stars of the show were the international segments (60% of total company), particularly developed markets in Europe and Japan.
According to Mr. Cook:
“Apple’s record June quarter was driven by double-digit growth in both Products and Services and growth in each of our geographic segments .”
One announcement on earnings day ended up drawing much of the attention. Apple disclosed a 4-to-1 stock split to take effect on August 31. Between earnings day and the stock-split execution, Apple climbed an impressive 39% in less than five weeks.
FY 20 Q4 – October 29, 2020
In fiscal fourth quarter, analysts began to dial up expectations, understanding that Apple could navigate the pandemic year well. EPS estimate of $0.69 still proved to be a bit conservative, as the Cupertino company topped it by 5%.
Apple posted a record revenue of $64.7 billion and quarterly earnings per diluted share of $0.73. The company did well, but here is the caveat: hurt by supply chain issues, the iPhone 12 was not launched early enough, and smartphone sales tanked ahead of the holiday quarter.
The CEO still sounded very much “glass half full” about the quarter:
“Apple capped off a fiscal year defined by innovation in the face of adversity with a September quarter record, led by all-time records for Mac and Services .”
Apple stock price climbed a modest 3% in the month following earnings, before slowly rising to the late January 2021 all-time highs.
FY 21 Q1 – January 27, 2021
The holiday quarter, Apple’s fiscal first of the year, is the most meaningful to the company’s financial results. Apple topped analysts’ expectations once again. EPS was estimated at $1.41, and the company surpassed expectations by 19%.
Apple posted record revenue of $111.4 billion, a 21% year-over-year increase. International sales sparkled, and a once struggling Greater China region stole the show. The quarter also featured a comeback in smartphone sales, now aided by the late launch of the 5G-equipped iPhone 12.
The CEO commented:
“We’re gratified by the enthusiastic customer response to the unmatched line of cutting-edge products that we delivered across a historic holiday season .”
Despite impressive holiday quarter results, Apple shares struggled to climb in the following month, dropping 14%. The broad market itself did not help much, and Apple probably fell victim to some macro-level headwinds – including rapidly rising interest rates.
What about next earnings?
Wall Street estimates that Apple’s fiscal second quarter revenue growth and EPS will land at 32% and $0.98, respectively. Apple has consistently delivered above-consensus results in the past several quarters, despite the COVID-19 crisis, and it could do so again this time.
Lately, Apple stock has showed some post-earnings volatility, even after delivering the goods – before eventually finding its way higher again.
However, share prices do not always rise straight up on the back of a strong earnings report. In many cases, the market moves ahead of schedule, bidding up the stock price prior to positive developments and “selling the news” once the results are delivered.
In Big Tech earnings week, which company do you think will impress investors and analysts the most? Chime in below.
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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)