Apple Company Returns and Earnings
Table of Contents
Returns
Earnings
Descriptive statistics
Regression
Test of significance
F test
Control limits
3 period moving average
Reference
In the paper, the returns and quarterly earnings of Apple Inc. will be analyzed. The company is a component of the S&P 500 index. The analysis will be carried out for a period of 5 years.
Returns
The share prices for a day before and a day after the announcement of quarterly results are collected. Further, the percentage change of these values is calculated to estimate the impact of the announcement.
Day before announcement
Day after the announcement
Percentage change
Q4 204
96.46
0.2
4.940%
Q3 204
92.3
95.5
3.4666%
Q2 204
74.23262
79.26849
6.7839%
Q 204
75.78525
70.29359
-7.2463%
Q4 203
72.57062
7.2909
-.7644%
Q3 203
58.43534
60.3877
3.3309%
Q2 203
54.28733
55.293
.7032%
Q 203
68.3368
60.98963
-0.754%
Q4 202
83.2805
8.399
-2.0800%
Q3 202
8.0282
77.5546
-4.7795%
Q2 202
76.7667
8.8566
6.6993%
Q 202
57.35432
59.93749
4.5039%
Q4 20
56.35863
53.49098
-5.0882%
Q3 20
50.6038
5.9827
3.5045%
Q2 20
45.33757
47.06058
3.8004%
Q 20
46.76268
45.46907
-2.7663%
Q4 200
42.23509
4.53059
-.6680%
Q3 200
32.95448
34.657
3.5263%
Q2 200
33.5442
34.78484
4.977%
Q 200
36.48235
36.25422
-0.6253%
There is a tendency to share prices to improve after the announcement of quarterly results if the results met expectations. However, the share prices are affected by several factors and not only the announcement of results.
Earnings
Quarter
Earnings for the quarter ($billion)
Q 200
6
2
Q2 200
3.07
3
Q3 200
3.25
4
Q4 200
4.3
5
Q 20
6
6
Q2 20
5.99
7
Q3 20
7.3
8
Q4 20
6.62
9
Q 202
3.6
0
Q2 202
.6
Q3 202
8.8
2
Q4 202
8.2
3
Q 203
3.
4
Q2 203
9.5
5
Q3 203
6.9
6
Q4 203
7.5
7
Q 204
3.
8
Q2 204
0.2
9
Q3 204
7.7
20
Q4 204
8.5
The company reported higher earnings in the first quarter, and the earnings dropped as the year progresses.
Descriptive statistics
Earnings for the quarter ($billion)
Mean
8.0625
Standard Error
0.689652802
Median
7.6
Mode
6
Standard Deviation
3.0842209
Sample Variance
9.5249737
Kurtosis
-0.48358455
Skewness
0.324007966
Range
0.53
Minimum
3.07
Maximum
3.6
Sum
6.25
Confidence Level (95.0%)
.443459903
The average of the earnings was 8.0625, while the standard deviation was 3.0842. The highest value of earnings during the entire period was $3.6b, while the least value was $3.07b.
Regression
The regression model will build a linear relationship between the time period and earnings. The regression line will take the form;
Y = a + bX
Y represents the earnings, while X represents the time period. The results of the regression are presented below.
Regression Statistics
R Square
0.3297
Adjusted R Square
0.29249
ANOVA
df
SS
MS
F
Significance F
Regression
59.5952
59.59
8.855
0.0080
Residual
8
2.40
6.73
Total
9
80.735975
Coefficients
Standard Error
t Stat
P-value
Intercept
4.992
.20502
4.089
0.0007
Period
0.2993
0.0059
2.9757
0.0080
The regression will take the form Y = 4.992 + 0.2993X. The value of R-square (0.3297) shows that the regression line is weak. The estimated earnings for next quarter is $.2 billion (Y = 4.992 + 0.2993 * 2).
Test of significance
A two-tailed t-test will be used to test the significance of the explanatory variable.
Null hypothesis: Ho: Xi = 0
Alternative hypothesis: Ho: Xi ` 0
The null hypothesis implies that the variable is not a significant determinant of movements in stock prices. The t-statistic for the time period is 2.975755, while the p-value is 0.0080. Since the p-value is less than ± = 0.05, the null hypothesis is rejected. This implies that the time period is a significant determinant of earnings (Evans, 204).
F test
The overall significance of the regression model can be analyzed using an F test at the 5% significance level.
Null hypothesis H0: ²0 = ²
Alternative hypothesis H: ²j ` 0, for at least one value of j
The null hypothesis implies that the overall regression line is not significant. From the regression results, the value of f-calculated is 8.855, while the p-value is 0.0080. The p-value is less than ± = 0.05. This shows that the overall regression line is significant (Evans, 204).
Control limits
Mean earnings
= total earnings / total number of days
= 6.25 / 20
= 8.0625
The upper and lower control limit will be calculated using the formula presented below.
The graph presented below shows the control chart.
The graph shows that the process is in control because the quarterly earnings are within the upper and control limit.
3 period moving average
Moving average
2
3
4.
4
3.54
5
4.52
6
5.43
7
6.43
8
6.64
9
9.8
0
0.6
.33
2
9.53
3
0.03
4
0.27
5
9.83
6
7.97
7
9.7
8
0.27
9
0.33
20
Thus, the estimated earnings for the next quarter is $0.33 billion.
Reference
Evans, J. (204). Business analytics: methods, methods, and decisions. USA: Pearson Education Limited. Web.