Is Apple’s Earnings Trend Your Friend This Quarter?

Apple (NASDAQ:AAPL) reports earnings on January 24th. In order to be properly prepared, you must be aware of Apple’s recent earnings trend.

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Here’s your Cheat Sheet to Apple’s annual and quarterly earnings trends:

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 37,490 42,900 65,220 108,250 156,510
Diluted EPS ($) 6.78 9.08 15.15 27.68 44.15

When looking at Apple’s earnings in the big picture, we can see why the stock has been Wall Street’s darling since the economic collapse. During that time, the stock has risen from a low of $82 to a recent high of over $705. With earnings as sweet as these, we don’t need a physicist to explain the driver for stock returns.

Here’s a big picture look at Apple’s technical chart since 2008:

Screen Shot 2013-01-13 at 12.00.06 PM

However, to prepare for Apple’s upcoming earnings release, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data…

Quarter Sep. 30, 2011 Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012
Revenue ($) in millions 28,270 46,330 39,190 35,020 35,970
Diluted EPS ($) 7.06 13.87 12.30 9.32 8.66

From this vantage point, the view is not as sweet. Earnings per share have been decreasing for three straight quarters. We prefer to see earnings increasing quarter-over-quarter as a simple way to gauge whether costs and the business model are stable. In this case, Apple doesn’t pass our test at the moment. However, if Apple can increase earnings this quarter, we would gain confidence the stock is regaining composure for a longer term rally.

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