The Amazing Relationship Between the Estimize Consensus and Apple’s Guidance

We’ve been collecting Estimize community data on Apple now for 8 quarters, which includes previously published estimates from some Estimize community members before the platform went live in December of 2011. We recently took a look at this data in more detail and found some really amazing stuff. In short, not only is the Estimize consensus more accurate than Wall Street by a large margin, but there are some very regular relationships between Estimize, Wall Street, Apple’s guidance, what the company reports, and how the stock reacts.

Here are some interesting statistics that we found:

  • The average difference between the Estimize EPS consensus and what Apple reports is 8.75% while the average distance between Wall Street and what Apple reports is 17.13%. The averages for Revenue are 4.74% and 8.80% respectively. This boils down to Estimize being far more accurate than Wall Street.
  • Here’s where it gets interesting. The average distance between Apple’s guidance and the Estimize consensus for EPS and Revenue are 32.03% and 15.48% respectively.
  • The average three day move in Apple’s stock after the report over the last 7 quarters has been 4.92% on an absolute basis.
  • For FQ4 2011, the distance between the Estimize consensus and Apple’s guidance was a whopping 43.45% for EPS and 20.98% on Revenue. Apple missed those expectations and was down almost 7% three days later.
  • For FQ1 2012, the tables flipped and the difference was only 12.37% for EPS and 6.48% for Revenue. Apple crushed it and was up 6.4% three days later.

So what does this tell us? Well, there is a very regular relationship between Apple’s guidance and the Estimize consensus which produces volatility when it gets out of whack. If you had these numbers ahead of time there was alpha to be captured.

So what does it look like this quarter? The relationship is actually right inline with the average, 31.91% above for EPS and 15.44% above for Revenue. That is counting over 225 estimates for the community this quarter. To me that says there will be very little volatility this quarter after Apple reports.

You can see the whole spreadsheet here.

Head over to Estimize and make your Apple estimate now.

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