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Another Earnings Beat for Apple in Fiscal 3Q15

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Apple’s earnings consistently surprise Wall Street

Apple (AAPL) recently reported its results for fiscal 3Q15, which ended in June. In this series, we will analyze the company’s results. Apple’s EPS (earnings per share) grew robustly by ~44.5% year-over-year (or YoY) to ~$1.85 during the quarter. The company also surpassed consensus Wall Street estimates by ~2.2%.

Apple’s earnings beat Wall Street expectations for the 11th quarter in a row in fiscal 3Q15. However, the biggest surprise for Wall Street in these 11 quarters was when Apple reported its fiscal 1Q15 results. Apple’s earnings beat the consensus estimate by a significant ~17.9% during that quarter.

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Dollar appreciation dampens growth of Apple’s earnings and revenue

The stronger dollar (UUP) negatively impacted Apple’s earnings and revenue during fiscal 3Q15. Despite the stronger dollar, Apple’s revenue grew robustly by ~32.5% YoY to ~$49.6 billion during the quarter. According to the company, the dollar impact subdued YoY top line growth by ~8%. Meanwhile, the average quarterly Trade Weighted U.S. Dollar Index increased YoY from ~102.4 to ~114.9 during the period.

Apple has predominantly international operations. Excluding the Americas, which includes North and South America, other geographies contributed to ~59.3% of the company’s overall revenue during fiscal 3Q15.

Management guidance on fiscal 4Q15

Apple expects revenue in fiscal 4Q15 in the range of ~$49 billion to ~$51 billion. It expects gross margin in the range of 38.5% to 39.5%. The company expects operating expenses in the range of ~$5.85 billion to ~$5.95 billion during the next quarter.

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In terms of ETF exposure, Apple made up ~3.8% of the SPDR S&P 500 ETF (SPY) at the end of July 2015. SPY had an exposure of ~9.6% in the top five technology sector stocks on the same date. Apart from Apple, these companies were Microsoft (MSFT), Google (GOOG) (GOOGL), Facebook (FB), and International Business Machines (IBM). The above chart shows the market cap that these companies had as of August 12, 2015.

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