×
Kensho Stats

Here’s what usually happens to Apple, tech stocks after the iPhone maker beats the Street like this

An Apple employee hands over Apple iPhone 7 phones on the first day of sales of the new phone at the Berlin Apple store on September 16, 2016 in Berlin, Germany.
Getty Images
An Apple employee hands over Apple iPhone 7 phones on the first day of sales of the new phone at the Berlin Apple store on September 16, 2016 in Berlin, Germany.

Apple's much better-than-expected earnings potentially set up a winning trade around the technology giant and some of its suppliers, if history is any guide.

The iPhone maker on Tuesday reported earnings per share of $3.36, exceeding analysts's estimates by 15 cents. Since 2010, Apple beat Wall Street by this magnitude (1 standard deviation above the mean beat) 11 other times.

Using hedge fund analytics tool Kensho, CNBC PRO conducted a study to discover historical trading patterns associated with similar earnings results. Specifically, we focused on how Apple shares and the stocks of its suppliers tended to trade a week and a month after a beat of similar magnitude.

Here's what we found:

One week later:

  • Apple traded higher 82 percent of the time with an average return of 4.2 percent
  • The Technology Select Sector SPDR ETF was up 64 percent of the time, with an average return of 0.9 percent
  • The S&P 500 was positive 73 percent of the time with an average return of 0.7 percent
  • The Dow was positive 73 percent of the time with an average return of 0.8 percent

Among Apple suppliers, shares of NXP Semiconductors and Skyworks showed the greatest tendency to rise and the biggest average returns, according to Kensho.


A week after an Apple beat by this magnitude:

  • NXP Semiconductors was up 67 percent of the time with an average return of 2.7 percent
  • Skyworks traded positively 64 percent of the time with an average return of 3.7 percent

Here's the full table of Apple and related securities one week after earnings:


Source: Kensho

Thirty days following a big earnings beat, Apple shares traded positively 64 percent of the time with an average gain of 6 percent, according to Kensho. The technology sector, however, didn't behave in a similar fashion.

A month later:

  • Apple was up 64 percent of the time with an average return of 6.2 percent
  • The Technology Select Sector SPDR ETF was up just 55 percent of the time, down about 0.05 percent

Among Apple suppliers, shares of NXP Semiconductors and Skyworks were once again the winners, while Broadcom also showed a positive bias, according to Kensho.

  • Broadcom was positive 73 percent of the time with an average gain of 5.5 percent
  • Skyworks was up 73 percent of the time with an average return of 6 percent
  • NXP Semiconductors was up 67 percent of the time with an average return of 3.8 percent

Here's the full table of Apple and related securities one month after earnings:


Source: Kensho

Disclosure: NBCUniversal, parent of CNBC, is a minority investor in Kensho.