×
Kensho Stats

This stock may outperform Apple itself if the iPhone maker’s earnings beat the Street

Customers compare Apple iPhone 7 and iPhone 7 Plus smartphones.
Sergei Fadeichev | TASS | Getty Images
Customers compare Apple iPhone 7 and iPhone 7 Plus smartphones.

The best trade off of Apple's earnings may not be Apple at all, as history shows one stock may see bigger gains than Apple itself if the iPhone maker's results top Wall Street's expectations.

Apple earned $1.66 a share last quarter, according to the Wall Street consensus estimate. But traders and other investors are betting Apple tops those expectations by 5 cents when it releases results Tuesday, according to Estimize, a crowdsourced earnings platform.

Using hedge fund analytics tool Kensho, CNBC PRO searched the technology industry to find the stock most-correlated to Apple.

Skyworks Solutions, which makes radio frequency chips for the iPhone, has a 0.62 percent correlation to Apple's shares over the last one year.


Source: CNBC analysis using Kensho

Digging deeper, we searched for how Skyworks performs when Apple's earnings significantly beat Wall Street estimates.

Apple has beaten the Street by 3 cents or more on 27 occasions over the last decade. Here's what happens one month later:


While Apple's stock is typically up almost 3 percent a month later after such a beat, Skyworks is up nearly 5 percent.

To be sure, this reliance on Apple isn't always a good thing as it does make the shares more volatile than other chip makers and that scares some analysts.

"Apple (through its contract manufacturers) accounted for 44% of Skyworks's revenue in FY15," wrote JPMorgan's Bill Peterson in a note Monday where he initiated the stock at a neutral rating. "While such exposure to Apple has benefits for Skyworks, as Apple is leading the way on RF dollar content and requires strong technical solutions from its suppliers, with such exposure, Skyworks's financial performance can be more volatile relative to that of RF peers and broad-based analog suppliers."

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