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Apple’s Packed Q1 Calendar Could Be Signaling Good News Ahead

By Christine ShortStock MarketsJan 26, 2022 09:37AM ET
www.investing.com/analysis/apples-packed-q1-calendar-could-be-signaling-good-news-ahead-200616032
Apple’s Packed Q1 Calendar Could Be Signaling Good News Ahead
By Christine Short   |  Jan 26, 2022 09:37AM ET
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This week Big Tech has started to report Q4 results and give expectations for Q1 and beyond. These names are typically watched with much anticipation and tend to deliver big beats over analyst estimates (the S&P 500 tech sector had a 92% EPS beat rate for Q3). Still, the recent sell-off in the market has tech investors looking less confident in future prospects.

Thus far, we’ve had better-than-expected results from IBM (NYSE:IBM) and Microsoft (NASDAQ:MSFT). IBM surpassed sell-side estimates thanks to double-digit growth in consulting and cloud revenues. Microsoft also attributed their results to growth in cloud revenues which increased 32% YoY. Tomorrow we hear from Intel (NASDAQ:INTC), and the tech earnings parade concludes with highly anticipated earnings from Apple (NASDAQ:AAPL) Thursday after the bell.

Apple’s report regularly generates a lot of attention, and this quarter should be no exception, especially considering how the sector is taking it on the chin this year. Tech has been hit hard as surging rates make that sector’s future earnings look less attractive, pushing up the cost of borrowing needed to invest in innovation. Value compression is also a big concern, with P/Es for many names in the space ballooning in 2020 and 2021. Apple hit a peak P/E of 41.8 last December, now settling down at (a still very high) 28.5.

After hitting $3T market cap just a few weeks ago, Apple’s stock is currently down 12.21% YTD, vs. the S&P 500, which is down 9.18%, and the NASDAQ, which has fallen 13.57% (as of January 25 close). However, the company is giving non-verbal cues that suggest what they will share on Thursday’s call might be better than investors expect.

Wall Street Horizon has found that while a standalone event such as a company’s upcoming earnings release date may affect volatility, investigating multiple events closely in relationship to one another can have a stronger impact on a company’s corporate financial health. Observing the information pre-event, during the event, and post-event and how they interact is critical to understanding how events relate to trading and risk strategies. Currently, we see a bullish event cluster lining up for Apple in Q1.

January 27 - Fiscal Q1 2022 Earnings Report and Conference Call

Apple’s Q1 event cluster kicks off with their FQ1 earnings report and subsequent call on Thursday, January 27.* Currently, sell-side analysts (polled by FactSet) are anticipating EPS to come in at $1.90 and revenues of $119B, which would suggest YoY growth of 13% and 7%, respectively. This is decent growth, although nowhere near what we saw in FQ2 and FQ3 when profit growth soared above 100%. Fiscal Q2 and Q3 EPS 2022 growth are currently projected to come in negative.

February 7 - Future Dividend Announcement

Apple has a history of announcing quarterly dividends, with one increase a year. On February 7, they are projected to announce an unchanged dividend of $0.22.* This track record of consistently increasing dividends and their ability to pass off higher prices could make Apple attractive as interest rates rise by insulating investors from inflation while offering a yield that (albeit increasing) bonds don’t.

February 18 - Video Release of Luck

On February 18, AppleTV will release the computer-animated fantasy film Luck*, starring Jane Fonda and Whoopi Goldberg. This is nearly a year after the film was initially scheduled to be released (March 19, 2021).

While Apple TV still owns only a small portion of the streaming market (according to JustWatch it’s 5%), that number continues to grow despite immense competition from behemoths such as Netflix (NASDAQ:NFLX) and Amazon (NASDAQ:AMZN) Prime. Those latter two names saw a steady deceleration of growth in 2021, with Netflix just announcing on their recent Q4 call that despite huge global hits such as “Squid Game” last year, new paid subscribers fell to their lowest level since 2015. This opens up the door for Apple TV to steal even more market share in 2022.

March/April - Spring Product Event 

For the last decade, Apple has held its annual spring event in March or April to announce new products. At this year’s event, the company is expected to announce their 5G Phone SE and newest iPad. 

While there has been no official announcement about when this year’s event will take place, speculation is that it will return to March (as it was from 2011 - 2019), after not being held in 2020 due to COVID lockdowns and then being held virtually on April 20 of last year. 

 

Apple’s Packed Q1 Calendar Could Be Signaling Good News Ahead
 

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Apple’s Packed Q1 Calendar Could Be Signaling Good News Ahead

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Comments (2)
Jason Crawford
Jason Crawford Jan 26, 2022 9:45PM ET
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Whoppi goldberg and jane fonda on apple tv? Another reason to short the stock
Joseph Obrzut
jzut Jan 26, 2022 8:46PM ET
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The way the market is acting right now it seems like it wouldn't make a difference. Everybody is in a selling mood except me.  I hope not as I own AAPL 100 at 23.20 bought April 2016.
 
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