Apple reported an outstanding 3rd quarter last night, easily surpassing analyst expectations. It was no surprise AAPL beat EPS expectations considering it reported higher than estimated earnings per share every quarter since 2004, but Apple's actual EPS of $7.79 was 33% higher than analyst's expectations and equates to 122% growth from the same quarter one year ago. Revenue came in $3.5B higher than expected. Sales of iPhones and iPads were also higher than expected. As per usual management issued conservative guidance which was below the Street's consensus.
We sent out a note to our Mini-Institutional clients yesterday morning detailing AAPL's trading pattern and opportunities surrounding the report. We discussed that Apple has reported higher EPS every quarter since 2004 and there was a 71% probability of trading higher from the close prior to the report to the open the next morning. The report was entitled: "Will Apple's Winning Streak Continue?," and it clearly has. AAPL is currently up over 21 points or 5.7% in the premarket and at one point yesterday evening it traded over $400 for the first time.
Another significant opportunity with AAPL's report is when it opens higher after earnings it trades down from the open to the close 68% of the time for an average loss of 67 bps.