Monday, March 21, 2011

Fiscal 2Q 2011 Final Estimates

I was planning on posting my estimates next week once the quarter had ended. However, because the last few times I posted estimates AAPL was priced closer to the next-3-months low than its next-3-months high price, and seeing as right now we're barely above the most recent low, I didn't want to let this opportunity go by.

In the last 3 estimate posts, I included a P/E blurb highlighting how extremely undervalued was the then current AAPL price. Here they are, for reference:

Jun30: Apple now trading at [$251.53] 12.1 times my FY2011 EPS (9.8x after excluding cash)
Oct02: Apple now trading at [$282.52] 12.7 times my FY2011 EPS (10.5x after excluding cash)
Dec23: Apple now trading at [$323.60] 12.9 times my fwd EPS estimate (10.5x after excluding cash)

It seemed to me that those 12-13x multiples (10x ex-cash) on my estimates were acting as a rock-bottom level for AAPL. No more. As of Friday's close, AAPL is now trading at [$330.67] 10.5 times my fwd EPS estimate (8.3x ex-cash). As I type this it's up to $336 in pre-market, which is merely inline with the Q's move.

It could be that this time I've bumped my estimates too high while WS analysts consensus for 2012 is right, and thus the market is now focused on a 12.5x multiple on them and not me (but it was around 15-18x forward-looking WS consensus last few times).

Given the historical record of Apple beating expectations (even mine), I'd bet against this possibility. Even a low 15x multiple on their 2012 EPS of $26.32 results in a $395 price for AAPL, and IMO those estimates are about 25% too low (DYODD, YMMV, etc).

See below the detailed estimates for this quarter and beyond.

3mo ending Mar-2011   Rev($M)   EPS($)
-------------------   -------   ------
Apple guidance         22,000     4.90
Analysts consensus     23,040     5.29
Deagol estimates       25,265     6.32

3mo ending Jun-2011   Rev($M)   EPS($)
-------------------   -------   ------
Apple guide (est.)     23,300     4.60
Analysts consensus     23,700     5.26
Deagol estimates       26,202     6.36

12m ending Sep-2012   Rev($M)   EPS($)
-------------------   -------   ------
Analysts consensus    117,190    26.32
Deagol estimates      140,913    35.76

Valuation (12mo beginning on)   EPS($)  Y/Y  10x  15x  20x
-----------------------------   ------  ---  ---  ---  ---
Trailing           (Apr-2010)    20.90  77%  209  314  418
Fair value         (Apr-2011)    31.49  51%  315  472  630
1yr target         (Apr-2012)    41.93  33%  419  629  839

Revenue breakdown:
Mac        4,724 ( 3,648 × $1,295)
iPod       1,815 (10,133 ×   $179)
iPhone    11,238 (17,652 ×   $637)
iPad       4,450 ( 7,111 ×   $626)
iTunes     1,707
Periph       571
Software     760

Income statement:
Revenue   25,265
COGS      14,996
GM        10,268
OpEx       2,410
OpInc      7,858
OI&E          45
Pre-tax    7,903
Tax        1,976
NetInc     5,927
Shrs.        938
EPS         6.32

GM%        40.6%
OpInc%     31.1%
Tax%       25.0%
NetInc%    23.5%


pk de cville said...


Aren't you using '2012' instead of '2011' here?

pk de cville said...

Whoops. Got away...

"Even a low 15x multiple on their 2012 EPS of $26.32"

"12m ending Sep-2012"

"while WS analysts consensus for 2012 is right"

"15x multiple on their 2012 EPS of $26.32 results"

Daniel Tello said...

pk, on the blurbs (text in red) I'm using the forward 12 months EPS as shown on the valuation table [$31.49], so for this one it includes half of FY2012 (notice the subtle wording change in the Dec blurb when I shifted the EPS window from FY2011 EPS to fwd EPS).

I did move to FY 2012 in the third data table for the full year "12m ending Sep..." since the 2011 datapoint can be (mostly) derived from the already reported values and the other estimates.

JavaJack said...

My apologies if this message is posted twice. The first time I posted I received an error so I'm trying again. What do you think of the continuing lines for the ipad 2? Did Apple under estimate the demand or is is the tsunami taking a toll on component supply? Apple's inability to produce enough ipad 1 units hurt the stock somewhat last fall.

Horace Dediu said...

I looked back at my forecast from January and we're in very close alignment on everything except iPad units. I had put in for 6 million but the new iPad may require an upward revision. Given that, seems that $6 is in the bag.

Interestingly, in 2007 Apple did not make $6 during the whole year. This year we're looking at $20 at least.

Anonymous said...

The lack of respect for the Apple growth machine (really...10x earnings and growing at 70% YOY this quarter and last) is disconcerting to me. If this is an efficient market, I am missing the efficiency...

Great job, Daniel...I have back of the envelope estimate this quarter at $6.09 - higher on Iphone, lower of a variety of other products.

Anonymous said...

Always appreciated Daniel. I hope you are right as I am not nearly as optimistic as you are. I like your iphone # but disagree with the ipad #.

Anonymous said...

Does it concern you at all that you might be too low in light of the fact that Apple guided to higher EPS this Q than last Q ($4.90 vs. $4.80). Could EPS actually increase sequentially?

Daniel Tello said...

Anon, I'd welcome a 4% beat on my estimate, so not a concern. However, a higher guidance than last quarter this quarter could be justified on other factors not necessarily implying a higher actual EPS than last quarter's actual, e.g better visibility on several unknowns like seasonality, product transitions, estimated warranty expense, forex, etc.

aapl said...

i think for good stock such as aapl ,below 15x is fair enough,
well good posting, thanx for sharing

Unknown said...

I just wanted to let you know that your willingness to stick to your estimates in the wake of recent talk about shortages,margin pressures and an iphone 5 delay is very reassuring to an investor like me.