Some things in life operate like clockwork. The sun rises and sets daily, the ocean currents churn constantly, and Apple (AAPL) blows away earnings estimates four times a year. One would think the market would price in such dramatic beats, but it is impossible to assume that Apple will continue to post jaw-dropping results every single quarter. The company gives the term “under promise, over deliver†new meaning.
Fantastic Quarter
Apple posted earnings of $6.40 per share, trouncing the estimate of $5.35 by almost 20%. If I were an analyst, I would add at least 40 cents to my estimate just to be safe and not look like a fool. Revenues were an awesome $24.67 billion, which beat the consensus by over $1.5 billion. I love the fact that gross margins came in at 41.4%. This can be calculated as revenues minus cost of goods sold divided by revenues.
I just bought an iPhone 4, and apparently so did several million of my friends. The company sold 18.65 million iPhones, which was over 2.3 million more than analysts expected. Verizon getting into the act certainly helped the cause and AT&T said bullish things regarding their own iPhone sales. Rumors are floating around of the iPhone 5 coming out this summer. The company certainly does a great job of keeping the consumer excited and in suspense regarding new product introductions.
Laughable Guidance
I don’t know why the company even bothers giving forward guidance anymore because it is always woefully short of reality. Management said it expects earnings of $5.03 next quarter, which is well below the current estimate of $5.25. I imagine that analysts will raise that number in the next few days given the strength of this quarter. The scary thing is that sales of iPads actually fell short this quarter and the company still posted such monstrous results. If Apple can keep churning out iPads and overcome some of the supply constraints, the future is even brighter for the company.
Normally, I would be hesitant of recommending a stock that is so universally loved by Wall Street, but this company is operating on a different planet right now. Nobody can deny that the fundamentals are beyond spectacular and the stock is not expensive to boot. It is trading at 13.3x next year’s estimates using the after-hours quote of $357. I expect earnings estimates to rise dramatically, so it is actually cheaper than this figure. Unless something dramatic happens, this could be a $500 stock in the next 12-18 months.
Apple Never Ceases To Amaze is an article from: 
