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If history is a guide, there's a very good chance Apple's earnings will be better than expected when it reports Tuesday afternoon, but the stock may not perform all that well.
Bespoke Finance Group studied three FANG-related stocks reporting earnings this week and found that Facebook has the best track record, with a 96 percent earnings beat rate and the best post-earnings stock performance. Amazon, which reports Thursday, has a spottier record, beating earnings estimates only 62 percent of the time.
Apple has a solid track record of beating earnings estimates and has done so 88 percent of the time and beat on sales 77 percent of the time. But while its stock has gained 58 percent of the time the day after its report, with an average 1.2 percent gain, it has averaged a decline after fiscal first-quarter results. Going back to 2001, when it has released those first-quarter results in January, the stock has declined an average 0.95 percent, according to Bespoke.
Apple has already warned about a revenue shortfall in the first quarter, and Bespoke notes that Apple has often lowered guidance when reporting earnings in January. In fact, it lowered guidance when it issued nine of its last 13 fiscal first-quarter reports.
Facebook, which releases its fourth-quarter numbers on Wednesday, averages a 2.8 percent gain on the day after it reports earnings. But when it releases fourth-quarter results, Facebook stock has gained an average 5.4 percent the next day. Overall, Facebook stock has risen 58 percent of the time the day after its earnings report.
Bespoke said in terms of sales, Facebook has an 88 percent beat rate. It missed estimates in the last two quarters, but before that, it had only missed sales estimates once. "Weakening revenue growth is one of the reasons the stock struggled so much in the second half of 2018," Bespoke said.
Amazon's fourth-quarter reports have been "hit or miss" over the past eight years, according to Bespoke. "The stock has beaten EPS on 5 of its last 8 Q4 reports, but it has only beaten sales estimates once (last Q4). From 2002 to 2010, the stock raised guidance on 5 of its 9 Q4 reports, but since 2011, the stock has lowered guidance 4 times," Bespoke wrote.
Amazon's stock reaction has also been wide ranging. After its January release of fourth-quarter earnings, its stock has averaged a 0.2 percent decline, but after the first-quarter report in April, it has gained an average 5 percent.