Apple’s Amateur Analysts Usually Beat The Pros

Philip Elmer-DeWitt has been covering Apple
AAPL
for almost four decades at Time Magazine, CNNMoney, Fortune and now at Apple 3.0. For the past 14 years he has been gathering amateur and sell-side analysts projections for Apple’s quarterly financial results.

In asking him how the amateurs stack up against the sell-side analysts he wrote, “The running joke of this contest, now in its 14th year, is that the amateurs almost always clobber the pros. The only quarters the pros win are when Apple misses badly. I suspect I can count them on one hand.” One reason the sell-side analysts tend to lag is that they want the company to beat their projections so that they can be positive on the results and increase their future forecasts.

With Apple reporting after the close today Elmer-DeWitt has compiled the June quarter projections. He has 13 independent and 12 sell-side analysts estimates by the revenue segments, gross margin and earnings. The independent’s projections are significantly higher than the sell-side analysts across hardware, services and EPS, which portend well for the amateur’s and Apple’s results.

Hardware revenue

• Independent: $59.63 billion
• Sell-side: $57.21 billion

Services revenue

• Independent: $16.92 billion
• Sell-side: $16.20 billion

Total revenue

• Independent: $76.55 billion
• Sell-side: $73.41 billion

EPS

• Independent: $1.11
• Sell-side: $0.99
• Estimize (245 individuals): $1.16

Independents looking for strong iPads, Macs and Services

Interestingly, the independent analysts have iPhones coming in a bit lighter than the sell-side analysts at $35.74 billion vs. $36.3 billion. It is iPads, Macs and Services where the amateurs are higher by $940 million, $650 million and $720 million, respectively, that account for their total revenue number being higher by approximately $3 billion. Note that the individual segment revenue deltas do not add up to the total revenue difference as the sell-side total is less than the segments total. I’m confirming the numbers, but overall I expect the independent numbers to remain significantly above the sell-side analysts estimates.

Shares are overbought

Heading into the earnings announcement the shares have become overbought as can be seen in its RSI or Relative Strength Index just shy of 70 in the top portion of the graph below. They are also a fair amount above the 50, 100 and 200 daily moving averages or the blue, red and green lines, respectively, in the main graph.