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Analysts’ Estimates for Apple’s Q1 2019 Profitability

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Apple’s Q1 2019 earnings

Previously, we looked at analysts’ revenue estimate for Apple (AAPL) in the first quarter of its fiscal 2019. The company projected first-quarter revenue of $89 billion–$93 billion during its fiscal 2018 fourth-quarter earnings call, but then lowered that estimate in January to $84 billion, in line with analysts’ latest estimate. Let’s now look at analysts’ profitability estimate for the company in the first quarter.

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Apple’s profit margin trends

In the last five quarters, Apple’s gross profits have grown at a strong double-digit rate YoY (year-over-year), and its gross margin has been solid. In the quarter ended September 2018, Apple’s adjusted gross profit rose 20.8% YoY to $24.1 billion, compared with 11.9% YoY in the same quarter of the year prior.

In the fourth quarter of fiscal 2018, Apple’s adjusted gross profit margin expanded YoY to 38.3% from 37.9%. In the last three quarters, the company’s adjusted gross profit margin has remained close to 38.3%.

Estimates for fiscal 2019’s first quarter

Reuters-surveyed analysts expect Apple’s adjusted gross profit margin to be ~38.0% in the first quarter, in line with the company’s revised guidance and slightly lower than the 38.4% it reported in fiscal 2018’s first quarter. Nonetheless, analysts expect Apple’s adjusted bottom-line margin to remain strong at 23.7%, compared with 22.7% a year ago.

In terms of profitability, Apple is far ahead of its competition. Its adjusted gross profit was over $100 billion in its last fiscal year, much higher than that of Amazon (AMZN), Microsoft (MSFT), Alphabet (GOOG), IBM (IBM), Facebook (FB), Oracle (ORCL), Micron (MU), NVIDIA (NVDA), and Qualcomm (QCOM).

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