Subscribe to receive this FREE daily commentary directly in your email
Apple
Now You Find Us On Apple News!
You just have to wonder how they do it. The amount by which Apple beat estimates, which was nearly $2 billion, almost 3.6 percent seems insane. Analysts were looking for $50.71 billion, according to Ycharts, Apple reported $52.58 billion. Look at the growth rates; the America’s saw revenue growth of 14 percent, Europe 20 percent – Europe!. China grew by 12 percent. These aren’t year-over-year growth rates off a tiny base. America’s revenue increased to $23.099 billion, Europe to $13.00 billion, and China to $9.8 billion. Huge.
[vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column][vc_tweetmeme type=”follow” follow_user=”michaelmottcm” show_followers_count=”true” large_button=”true”][/vc_column][/vc_row] Get This In Your E-Mail Subscribe
So much for there being no iPhone demand. Apple only sold 46.6 million units in the quarter, a rise of 14 percent sequentially, and 3 percent year-over-year.
Then, of course, the guidance for the first quarter, tremendous. Apple is looking for revenue of $84 to $87 billion, and at the mid-point, that is revenue of $85.5 billion. Wall Street consensus estimates were at $84.60 billion.
What about those rumors? No iPhone demand, production issues? It seems like there is no problems based on these numbers.
AAPL Price data by YCharts
[poll id=”8″]
Starbucks
Then there is Starbucks, a once mighty flyer that has had its wings clipped. The company reported earnings of $0.55 in line with estimates. Revenue came in $5.698 billion, while estimates were looking for $5.807 billion.
If the results themselves weren’t bad enough, Starbucks then gives these long-term targets, why companies do this is beyond me. It either sets expectations that are too high, think Celgene. Or it sets them at levels the street doesn’t want to see, think Starbucks. Annual Global Comparable Sale of 3-5 percent, revenue growth of high single digits, earnings growth of 12 percent or higher, who wants to hear these things. These aren’t growth numbers; these are we are either setting the bar low to beat, or we are no longer a growth company, so don’t value us that way anymore.
Meanwhile, Starbucks guided the full-year 2018 EPS to a $2.30 to $2.33, shy of consensus of $2.35, while revenue is expected to grow in high single digits. Even at a 9 percent growth rate, revenue would come in at $24.40 billion, based on 2017 revenue of $22.39 billion, consensus was looking for $24.75, according to Ycharts. Disappointing all around.
The stock is currently trading at 19 times 2019 estimate of $2.70, which will likely have to be lowered slightly, but still it is expected growth of about 15 percent, which certainly doesn’t make the shares overvalued, that is the one saving grace here. But to get shares moving higher, two things need to happen. The market needs to give the stock a higher multiple, which seems unlikely to happen, or the company needs to grow earnings faster.
[poll id=”9″]
Premium Content: Benefits include the ability to reach out to Mike with questions through a chat room, direct message, or comments.Â
Cracking The Productivity Mystery
Productivity Issue In One Chart
Facebook, Alibaba, Apple Earning Preview
What Good Are The Analyst Worth!
Tesla
Tesla shares fell far more than I would have expected, but part of that could also be attributed to the ending of the electric vehicle subsidies. But that could be viewed as a positive in a way. Why? Because first, the limit is on the first 200k cars, which Tesla is already pretty close too so that subsidy would have gone away, regardless. The other point is that now all the auto companies coming out with their version of electric cars won’t receive that benefit that helped Tesla to get its feet on the ground.
But the truth of the matter, how many people buying a $100k are car going to decide to choose a Tesla over a Mercedes because of the subsidy. Chances are at that price range it is a nice option to have but, likely not driving the ultimate decision. Second, the subsidy was never really going to benefit Model 3 owners anyway, because like we said earlier it was ending anyway.
Interestingly, Tesla Zero Electric Vehicle credit sales in the quarter were less than $1 million. In the prior quarter, they were $100 million.
As for the trading of the stock, there is so much day-trading in the name, it is impossible to tell at this moment were shares are going. The one positive is that the stock didn’t close at the lows of the day, and it tried very hard to hold $300.
Unlock Deeper Insights with Exclusive Member-Only Video Content on The Market Chronicles YouTube Channel – Just $34.99/Month
Let see where it is in 3-days time when the day traders find another stock to day-trade. Nvidia is reporting soon.
Free Articles Written By Mike:
Chipotle Shares Could Fall 20 Percent Further
Broadcom’s Raised Forecast Is Great News For Chip Stocks
Starbucks 4Q Earnings Could Surprise Investors
Apple Shares Are Set Up For Post-Earnings Fall
Apple’s Chip Suppliers Are Breaking Out
Amazon, Alphabet And Microsoft Simply Crushed It
Why Mastercard’s Stock Could Rise 15%
Why Amazon’s Earnings Aren’t As Strong As They Look
Qualcomm Deal With NXP Will Eventually Get Done – M…
Celgene and Biogen May Be Signalling A Biotech Bottom
AMD Could Rise 10% Despite Results, Trades Indicate
Why Tesla’s Stock Is Breaking Down
Why Is McDonald’s Valued Like a Big Tech Stock?
Why Biogen May Sink Biotech Sector As Earnings Beat
Netflix Stock Likely to Rise as EPS Estimates Jump
Bank of America Could Rise Nearly 50%: Technical Analysis
AMD Could Break Out After Results
Qualcomm’s Bid For NXP Still Lacks Investor Support
Celgene’s Sharp Sell-Off Is Likely Overdone
Procter & Gamble Continues To Have Two Big Problems
GE: Getting Excited For The Future
Why IBM’s Big Stock Rally Won’t Last
Allergan Shares On The Verge Of Further Breakdown
We offer a lot of great commentaries all week talking about the major and relevant market events. Be sure to subscribe to get this all and of all free commentaries sent directly to your inbox or follow us on Twitter.
-OR-
[vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column][vc_tweetmeme type=”follow” follow_user=”michaelmottcm” show_followers_count=”true” large_button=”true”][/vc_column][/vc_row]
Michael Kramer and the clients of Mott Capital own shares of TSLA, CELG, SBUX
Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future.
Subscribe to receive this FREE daily commentary directly in your email
Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
Liquidity Strains Persist Creating Dangerous Market Back Drop
Mott Capital's Market Chronicles 6 hours ago