Like everything in 2011, earnings season has been one of extremes. Strong reports are rocketing stocks higher, and any hint of poor earnings is sending investors packing. Take Apple Inc. (NASDAQ:AAPL) for example:
Apple announced that its earnings results came in below analysts’ expectations, the first such miss since 2004. Revenue for the company came in at $28.3 billion, and the company posted $7.05 earnings per share — representing a 3.9% and 3.2% miss, respectively.
However, it’s important to keep in mind that these results represent 39% revenue growth and 54% earnings growth year-over-year. That’s solid growth for a large-cap company, and gross margin remains high at 40.3% compared with 36.9% last year.
The big reason why Apple posted this miss is because they are a victim of their own success. Customers held off on purchasing iPhones this quarter due to rumors that the company would be introducing a newer version in October. Of course that is exactly what happened, and Apple announced first day pre-orders exceeded 1 million units and exceeded the previous record of 600,000.
In total, they sold over 4 million of the new units in the first three days. This represents more than double the 1.7 million sold by Apple last year during the introduction of the iPhone 4. And, considering that Apple sold 17 million iPhones in the last quarter, the company is well on its way for more blowout top- and bottom-line growth.
This is why the stock was not punished on the earnings miss and will quickly approach 52-week high levels. And I highly recommend that you take advantage of this short-term dip and pick up shares of AAPL under $420. The company is a screaming buy at current prices.
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