FORTUNE -- The bad news is that every analyst we've surveyed -- even the most bullish -- believes that for the first time in a decade Apple (AAPL) will report that its income this quarter was lower than the same quarter the year before.
According to Thomson Financial, the consensus EPS for fiscal Q2 2013 on Friday was $10.18, down from $12.30 in Q2 2012. The analysts we've heard from so far are even more pessimistic. Their estimates range from a low of $9.23 to a high of $10.39 for a mean EPS of $9.85.
The good news for investors is that Wall Street seems to have already priced this negative income growth into the stock. Judging from the performance of Apple's shares since early March, the smart money has been pouring back into the company for the past three weeks.
The problem for Apple is not that its business is collapsing. Indeed, the projected revenues of $41 to $43 billion Apple offered analysts in its quarterly guidance would represent another record second quarter for the company.
Rather, it's what analysts call a "tough compare" in terms of gross margins -- a measure of the efficiency with which a company turns revenue into profits. Last year at this time Apple's gross margin peaked at an extraordinary 47.37%. This year, following the introduction of a slew of new products -- including new Macs, iPhones and iPads -- it is projecting gross margins somewhere between 37.5% and 38.5%. That's what's driving the income down. Wall Street seems to be betting that in the next six to 12 months, those numbers have nowhere to go but up.
It's all laid out quite clearly in a series of charts posted Saturday by Robert Paul Leitao, who manages at the Braeburn Group the world's largest and must bullish collection of independent Apple analysts. You can read his analysis of the quarter that ends this week at his website: Posts at Eventide.
It's something the amateur analysts seem to understand and the pros still don't get
A day before Apple (AAPL) is scheduled to report its 3rd quarter earnings, Robert Paul Leitao thinks he has put his finger on what's wrong with the Street's view of the company.
Leitao, who rides herd over 30 amateur analysts at The Mac Observer's Apple Finance Board, has been tracking the gap between Apple's revenue and its earnings. MOREPhilip Elmer-DeWitt - Jul 18, 2011 7:54 AM ET
If you ask about sales in the quarter that just ended, you get three very different answers
Apple's (AAPL) third fiscal quarter of 2011 ended Saturday at midnight. How did it go? That depends whom you ask.
In April, Apple CFO Peter Oppenheimer told analysts he expected Apple to earn $5.03 per share on sales of $23 billion. But given how Apple tends to low-ball its forward-looking guidance, nobody really believed him.
The MOREPhilip Elmer-DeWitt - Jun 26, 2011 11:34 AM ET
With Q2 earnings due next week, the two groups of analysts are once again miles apart
The amateur analysts who follow Apple (AAPL) can afford to be more bullish than the professionals who do it for banks and brokerage houses. After all, unlike the sell-side analysts who are telling investors to buy the stock, they don't have clients who will be angry if the company doesn't exceed expectations.
But with Apple set MOREPhilip Elmer-DeWitt - Apr 14, 2011 11:08 AM ET
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