Monday, July 18, 2011

Apple at record high yet cheap as ever

Ok maybe not as cheap as in 2003...

Still, despite the 20%+, 64+ point run in less than a month to a record all-time intraday high today of $374.65, those buying AAPL at that price are still getting it at a near-record low (recent years) valuation multiple of only 10.8 times my forward-looking EPS estimate (8.6x after excluding cash).

Fiscal 3Q 2011 Final Estimates

3mo ending Jun-2011   Rev($M)   EPS($)
-------------------   -------   ------
Apple guidance         23,000     5.03
Analysts consensus     24,920     5.80
Deagol estimates       26,070     6.62

3mo ending Sep-2011   Rev($M)   EPS($)
-------------------   -------   ------
Apple guide (est.)     27,500     6.35
Analysts consensus     27,700     6.42
Deagol estimates       31,045     8.33

12m ending Sep-2012   Rev($M)   EPS($)
-------------------   -------   ------
Analysts consensus    125,800    29.15
Deagol estimates      143,777    37.92

Valuation (12mo ending on)   EPS($)  Y/Y  10x  Cash  Tot
--------------------------   ------  ---  ---  ----  ---
Trailing        (Jun-2011)    24.09  81%  241    77  318
Fair value      (Jun-2012)    34.77  44%  348   110  458
1yr target      (Jun-2013)    48.32  39%  483   157  640

Revenue breakdown ($M):
Mac        5,523 ( 4,220 × $1,309)
iPod       1,493 ( 8,700 × $172)
iPhone    11,492 (17,600 × $653)
iPad       4,741 ( 7,750 × $612)
iTunes     1,551
Periph       497
Software     773

Income statement ($M):
Revenue   26,070
COGS      15,334
GM        10,736
OpEx       2,589
OpInc      8,147
OI&E          82
Pre-tax    8,229
Tax        2,016
NetInc     6,213
Shrs.        938
EPS         6.62

GM%        41.2%
OpInc%     31.3%
Tax%       24.5%
NetInc%    23.8%


JavaJack said...

Wow! Thanks for this. I hope you're right, but then you almost always are, so these are very exciting numbers.


Horace Dediu said...

This quarter I feel I'm way out on a ledge by dialing in only 80% y/y iPhone unit growth. I felt that the product was a lame duck and long in the tooth this quarter and that as such 80% is a decent enough performance. In previous years a down quarter was 60% or so growth. The consensus seems to be north of 100%.

If the consensus is right (and I'm wrong) I will have to re-examine my assumptions about what growth the brand can sustain.

incorrigible said...

1yr target (Jun-2013) (48.32 39% 483 157 640)

Boy how time flies? J/K. Thanks for Posting.

Anonymous said...

Look at that Sept 2011 estimate. Daniel, hope you are right!

Jared said...

Wow, you were under by a few $billion. Great work by the way.

Roy in San Jose said...

Yes, Apple is still grossly undervalued, especially after the phenomenal results announced today.

If GOOG at $600 after its reported $8.73/share results for its MRQ represents the par for the course for market sentiment right now, on that same scale, AAPL should be valued right now at $538, just based on its $7.79 earnings, even ignoring Apple's MUCH higher growth rate (I'm ignoring cash / share for both companies to keep things simple).

So even after the $17 jump in after hours trading, AAPL is way below the "GOOG standard" of $538!

JavaJack said...

Daniel... will you be having any post financial report commentary or a analyst shoot-out list? Your estimates must be near the top I would think.

Roy in San Jose said...

There is a new bit of respectability that Apple is now enjoying on WS, at least for the moment, following the last earnings release.

The blow out (isn't there a better term??) earnings were a big reason for it of course, but I really believe it was also the Four Musketeers of Apple Blogdom, Daniel Tello, Horace Dediu, Andy Zaky and Philip Elmer-DeWitt, who have restored some degree of sanity in the heads of the fund managers and hedge fund traders.

OK, give a little credit to Gene Munster of Piper Jaffray for being one of the lone WS voices; but even he grossly underestimated the earnings.

But most of the rest of the WS analysts are now beginning to finally comprehend what a monstrous cash generating machine Apple has become. For all their original "research", I think they have started taking the bloggers seriously for the first time.

By a remarkable coincidence, a couple of WS analysts even upped their EPS estimates to the $6.50 range just a week before earnings. Some brilliant new insights? Ha! Sure.

Well, Jon Najarian of CNBC Fast Money fame has stopped talking about how a 1000 shares of AAPL is "like buying a condo", and presumably, Guy Adami no longer considers $280 as a target for AAPL.


I was hoping a stock split might get the stock over the hump, but perhaps that is no longer necessary. It seems a light bulb has turned on in the collective minds of the WS Einsteins.

By quietly boning up on what the bloggers are saying, and increasingly, aligning their own "research" with the bloggers' projections.

For that, they get paid?? And megabucks too??

Please, somebody give me a job like that. Not only I can do what they can (I religiously read what Tello, Zaky, Dediu and Elmer-Dewitt are saying), but I even have some original thoughts, like some day, perhaps 4-5 years from now, Apple could own 25% of the enterprise desktop, and if certain things happened, perhaps even own the desktop 50-50 with MSFT.

Anyone long AAPL needs to thank the bloggers, and in particular, Daniel Deagol Tello who put the WS jokers to shame and put the bloggers on the prime time stage.

I, for one, really needed somebody to validate my own convictions about Apple, and following the bloggers validated my own thinking, and gave me the confidence to stay the course.

As a result, I am far, far wealthier than I might have been if I had acted alone. Daniel - thanks, and salute. Ditto to the other bloggers.

JavaJack said...

Apple, Inc. was, for a moment, the most valuable public company in the world as measured by market capitalization. Apple's market cap briefly passed ExxonMobil today, reaching $341.55 billion in valuation. ExxonMobil was valued at $341.42 billion. Both stocks are fluctuating and Exxon is now more valuable again.

Roy from San Jose said...

The Motorola deal seems very risky for Google. I can't disagree with any of Henry Blodget's points: