Is Wall Street Underestimating Apple’s Earnings?

Source: Apple.comA comparative examination of consensus expectations from Wall Street and consensus expectations from dozens of buy-side and independent contributing analysts suggests that Apple’s (NASDAQ:AAPL) upcoming earnings numbers may exceed Wall Street’s estimates, reports Seeking Alpha. Apple is expected to report its September quarter earnings after the market closes on October 28.

Wall Street’s current consensus expectation for Apple’s quarterly earnings is $36.809 billion in revenue and $7.88 earnings per share. This is in line with the revised earnings guidance provided in an 8-K form that Apple filed with the Securities and Exchange Commission soon after the company announced that it had sold a record-breaking nine million units of the new iPhone 5S and iPhone 5C models.

“Apple expects total company revenue for the fourth fiscal quarter to be near the high end of the previously provided range of $34 billion to $37 billion, and expects gross margin to be near the high end of the previously provided range of 36 percent to 37 percent,” wrote Apple.

However, a group of buy-side and independent analysts have consensus expectations that are even higher than Wall Street’s expectations and Apple’s own earnings guidance, reports Seeking Alpha. According to data derived from the Estimize platform, this group of independent analysts has consensus expectations of $37.422 billion in revenue and $8.10 EPS.

The substantial differential between the two groups of analysts could indicate that Wall Street is underestimating Apple’s September quarter earnings. Wall Street’s record certainly seems to favor higher consensus estimates. According to Seeking Alpha, Apple has beaten Wall Street consensus revenue expectations five times over the past eight quarters and EPS expectations six times. On the other hand, Apple has also beaten Estimize consensus revenue expectations five times over the past eight quarters and EPS expectations seven times.

Based on data from the Estimize platform and Wall Street’s record in regards to Apple’s quarterly earnings expectations, there is a real possibility that Apple will surpass Wall Street consensus expectations once again this quarter. Here’s how Apple has traded over the past five trading sessions.

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