Apple does far more than just Shine with another Record Blowout Earnings Number

Not to be outdone by its Technology peers in the "Blowout earnings" game, Apple (AAPL) came through with a record breaking September quarter. Going against history Apple also guided higher than Wall Street anticipated for the Christmas quarter. The earnings of $1.01/share and the guidance of $1.42/share for next quarter led the stock to gain 7% after hours.

There are blowout earnings and there are BLOWOUT earnings and Apple's quarter certainly falls into the 2nd of the 2 categories. Apple's earnings of $1.01/share beat the street expectations of $0.85/share and Revenue of $6.22Billion was well ahead of the expected $6.02Billion. The company ends its Fiscal Year this quarter and for FY07 the company did over $24Billion in revenue. This first time in its history having a FY with revenue over $20Billion. Guidance from the company surprised analysts as it was very bullish compared with Apple's historic trends.

Apple's typical conservative guidance due to "less favourable commodity conditions" and "product transitions" really was a sly practice for past quarters but I believe the company knows the Street is onto its game and is now ready to step up to the plate and concede that they are in really good shape, regardless of economic conditions, to capitalize on an excellent product mix and unmatched company momentum.

The Mac line of computers was very strong, making record sales during the quarter, and culminating with 2.16Million units sold. The music player iPod line sold 10.2 Million units and the company added sales of almost 1.2Million iPhones. The Phone/Media revolutionary device was stronger than even very bullish analysts had expected. It was clear that the decision by the company to cut the price of the device by $200 late in the quarter helped to spur furthur additional sales. Apple cited a favourable tax rate, favourable component costs, a weaker US currency and good seasonal trends, as all attributing to the record results.

Even with a warning to analysts that some of these trends will become more normalized the company still guided 3 cents higher than the Street had expected. If Apple sticks to its previous trends of posting a guidance number that it is very confident in making than Investors everywhere should feel almost euphoric as to what an earnings result the company could be in for come January. As Apple's stock has rallied to $174 before the results the company growth metric were expanding almost into overvalued territory. Forward P/E and trailing P/E ratios were both inflating and PEG numbers were getting higher than many technology competitors.

Apple's trailing ratios will come down slightly based on Monday's closing price. At $174 the P/E stood at 49 with trailing earnings of $3.55/share. After the results trailing P/E stands at 44 on $3.94/share in earnings. With the stock up to $187 in after hours trading the P/E climbs back up to 47.5. Investors are clearly bullish about growth in all sectors for Apple. The forward guidance for the January quarter puts trailing earnings at $4.22/share. At current trailing P/E ratios that puts a target price of $198 on shares going into January. It's no surprise that analysts have seemingly stumbled over each other of late increasing their own price targets for Apple stock. While all the bullish sentiment can be enamouring the realist trader must re-think future possibilities. Apple hitting $200 by January of next year represents about a 7% gain, and for a stock that has seen a 20% rise in 1 month and a 90% rise in 6 months, that's actually slowing momentum. Keep in mind I am warning momentum traders not long term investors. The belief in Apple's continued execution has benefited investors tremendously over the last couple of years and with this product mix that is almost assured to continue. As such any profit taking dips should be well welcomed by the ever growing base of Apple believers.

With the continued growth successes in the Mac computer line, iPods fresh and ready for Christmas and the iPhone just coming into its own, the future is still very bright for Apple as a company and as a stock. With these positive results and bullish forecasts there seems to be little resistance in Apple's path to $200 and beyond.

Disclosure: Author is long AAPL