Just How Important Are Apple’s Earnings?

Apple’s (NASDAQ:AAPL) December quarter earnings are being seen as the most important in several years for the company. After all, the iPhone maker’s stock has been under considerable distress over the past few months on investor concerns about its long-term growth prospects.

To add to the pressure, there have been recent reports claiming decreased iPhone and iPad demand in the ongoing quarter. A handy beat in what is traditionally a strong three-month period for Apple will go a long way in shaping the mood of the coming few days.

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Apple has only missed Wall Street forecasts four times in the last 10 years, but somehow, two of those have come in the two most recent quarters. This time around, it won’t be enough for Apple to just meet targets, according to some. In fact, that may cause shares to fall further in the short term. Beating expectations, on the other hand, will go a long way in restoring confidence.

“If you have a 10 percent to 15 percent beat on estimates, it will be enough to have people say, ‘Oh my gosh, Apple has its game back,’” said Chris Bertelsen, the chief investment officer of Global Financial Private Capital, told Reuters. The company also holds a fairly major sway on the larger markets.

Apple holds a 3.8 percent weight in the S&P 500 and a 10 percent weight in the Nasdaq Composite Index. So even though the coming week includes other tech heavyweights, including Google (NASDAQ:GOOG), IBM (NASDAQ:IBM), and Microsoft (NASDAQ:MSFT) on the earnings calendar, all eyes will be Apple.

“It’s the most important stock in the stock market,” Phil Orlando from Federated Investors told MarketWatch. “Everyone will be interested in what to see what their numbers are and what their guidance will be.”

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According to Wall Street averages calculated by FactSet, Apple will post earnings of $13.45 a share, down from $13.87 a year ago. Revenue is expected to rise to $54.92 billion from $46.33 billion in the year-earlier period. It should have sold between 47.5 million and 53 million iPhones and between 23 million and 25 million iPads.

Channing Smith of the Capital Advisers Growth Fund agrees that next week’s earnings report could help restore confidence. “Back in September, Apple could do no wrong, and today they can do no right,” Smith, who owns Apple, told CNBC. “If you get any type of the beat, we think you’ll see a relief rally.”

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