Apple Second (Fiscal) Quarter Earnings

April 26, 2015

It’s been roughly six weeks since our last post (Thinking About Risk/Reward), in which we detailed our rationale for staying out of the market while we wait for a clear opportunity to present itself. Since then, we’ve taken a couple of swings at the $TQQQ – a leveraged bull ETF tracking the NASDAQ – as it retook the 10 and 50 day moving averages. Aside from that, we’ve been primarily in cash… waiting for the right opportunity to deploy it.

Discipline is the number one rule in investing. Entering and exiting positions based on emotions is an absolute killer. That’s why we’re waiting for Apple to report earnings before entering a position. Here’s what we expect tomorrow:

AAPL 2Q15 Estimate 2.18.2015

We expect China Mobile to add significant velocity to the iPhone business during the first three months of 2015, boosting top line revenues well above management guidance. iPads are likely to disappoint in our view, and will continue that trend for the foreseeable future.

We will most likely re-enter bullish AAPL positions on Tuesday *if*

  • They report north of $8.00 in LTM EPS,
  • Guidance comes in north of $46 billion for the third quarter,
  • The capital plan expected to be unveiled tomorrow satisfies the street, and
  • Most importantly: the chart and technicals react well.

Looking forward to the report tomorrow. We will unveil our 2015 full year estimates tomorrow. Many are discounting the Apple Watch, but it could be a significant driver of supplemental revenues / earnings in the quarters to come.