Earnings season is hitting its stride. Over 100 of S&P 500 companies have already reported first quarter results, and it appears we’re on track for a relatively positive season. In fact, of those who have released, over 80 percent have surprised on the upside, while less than 10 percent have come in below expectations.

 

The poster child for positive earnings surprises, Apple (AAPL), reported another blockbuster quarter (its fiscal 2^nd quarter) after the market closed yesterday. Our Growth Portfolio member reported revenues of $13.5 billion, up 49 percent, easily outpacing analysts’ expectations of $12 billion. Earning per share beat expectations by even more at $3.33 vs. consensus estimates of $2.46, as the company reported impressive gross margins of 41.7 percent, almost 3 percentage points better than company’s earlier guidance. Earnings were helped by a strong mix of product sales, including higher-margined Mac computers, whose shipments grew by 33 percent vs. the year earlier period. The company’s largest revenue contribution came from the iPhone unit, with sales of $5.3 billion. The company sold 8.75 million units during the quarter, up an astounding 131 percent from a year earlier, and more than 3 times the 41 percent growth seen in the smartphone market as a whole.