As of Friday's close of $105.99, AAPL is trading at a 12.5x multiple on my next-twelve-months EPS estimate (9.5x ex-cash).
I expect very strong results for Q1 with record-breaking net income of $15.7b, but guidance for Q2 may come in light (even at the top end) relative to expectations. Hope I'm wrong on that.
I'm estimating last quarter's revenue growth in the high teens (setting the tone for the whole 2015 Fiscal Year) as well as strong +39% gross margins, majorly driven by a high proportion of the iPhone user base upgrading to 6 and 6 Plus with unit sell-through growth estimated at 29/24/17% for Q1/Q2/FY15 (compared to 11/27/16% for Q3/Q4/FY14) and FY15 ASPs holding steady or slightly increasing despite FX headwinds early in the fiscal year.
I've finally (and very tentatively) modeled something for Apple Watch: as a base case (for now) I consider it a solid accessory for the iPhone and then strongly discount it by 25-35% (due to final product uncertainty and other unknowns such as pricing potential) which results in about 15% of compatible iPhone penetration (75m of 500m iPhone-5-and-higher user base after first 3 years).
Those saying Watch doesn't move the needle must not be looking beyond FY2015 at all, as in fact I model only 6.5m units for this fiscal year with shipments starting in the end of March contributing 1m units in the current quarter. Yet, my conservative base case already represents about 25% of the company-wide revenue growth in '16 and '17, getting to a modest $20b by then (somewhat slower than iPad which had the steepest revenue uptake of any Apple product, but this excludes additional wristbands and other Watch accessories which I model separately and even more tentatively). Again, it could easily be 2x that, considering the fast adoption of compatible iPhones and the customer base's high acquisition power.
This model saturates relatively quickly (sort of like iPad?), and long-term (beyond 2020) approaches $30b/yr since it's limited by its 15% penetration of compatible iPhones, and by how much the iPhone base itself grows, and a similar assumption (perhaps the only slightly optimistic one?) of roughly 3 years for the replacement cycle. But if Watch becomes untethered from iPhone all bets are off as I have no clear paradigm towards deriving a sensible TAM (other than Horace's silly/profound "every wrist"), guessing a likely penetration and rate of adoption within this TAM, the replacement cycle, and especially pricing. At least not until more clear market size/segment/pricing and version 2.0 signals come about, clues about which at first Apple will wisely try to hide within the new "Other products" catch-all category until the bulge is too obvious. So I don't expect to be able to delve into reframing Watch before the end of Q4, or perhaps next year if we don't get 2.0 by the end of this year.
Mac and iPad continue with their role-reversal tangled dance (Takes Two To Tango!), now about to attempt a 12" twist-move performed by the rumored 12" retina MacBook Air followed by the 12-13" iPad Pro, perhaps starting as soon as this quarter or next. I'm estimating Mac/iPad unit sell-through that's 19/6, 9/13, and 12/4% higher/lower from the same period the previous year in Q1, Q2, and FY15 respectively (compared to 11/10, 20/9, and 15/3% higher-Mac/lower-iPad for Q3, Q4, and FY14 respectively) and ASPs in slight decline during Q1-Q2 mostly due to FX effects (love that pun, FX FX, sorry).
The strong dollar (11-year highs on the USD index) has become an even stronger headwind than last couple of quarters for ASPs and gross margins (as most costs are pegged to the dollar), and yet both metrics will hold up or even increase slightly, such is the pricing power of Apple's current (and soon-to-be-released) product lineup.
3mo ending Dec-2014 Rev($M) EPS($) GM(%) ------------------- ------- ------ ----- Analysts consensus 67,280 2.58 Apple guide low 63,500 2.33* 37.5 Apple guide high 66,500 2.56* 38.5 Deagol estimates 67,670 2.66 39.2 (5.89b shares) 3mo ending Mar-2015 Rev($M) EPS($) GM(%) ------------------- ------- ------ ----- Analysts consensus 53,630 2.00 Apple guide low (e) 50,000 1.79* 38.5 Apple guide high(e) 53,000 2.02* 39.5 Deagol estimates 51,872 1.97 39.8 (5.85b shares) * EPS guidance ranges derived from other figures provided by Apple and diluted shares outstanding estimated by me. 12m ending Sep-2015 Rev($M) EPS($) ------------------- ------- ------ Analysts consensus 212,710 7.81 Deagol estimates 213,321 8.06 Valuation (12mo ending on) EPS($) Y/Y 10x Cash* Div Tot -------------------------- ------ --- --- ---- --- --- Trailing (Dec-2014) 7.02 22% 70 21 2 93 Fair value (Dec-2015) 8.46 20% 85 25 2 112 1yr target (Dec-2016) 10.02 19% 100 32 2 134 * Cash/share balance net of long-term debt F1Q15 Revenue breakdown (millions, except ASP): iPhone 42,782 (68.0 × $629) iPad 10,199 (24.0 × $425) Mac 7,162 (5.65 × $1,268) Services 4,777 Other 2,749 Income statement (millions, except EPS): Revenue 67,670 COGS 41,148 GM 26,522 OpEx 5,494 OpInc 21,028 OI&E 329 Pre-tax 21,357 Tax 5,660 NetInc 15,697 Shrs. 5,890 EPS $ 2.66 Ratios: GM% 39.2% OpInc% 31.1% Tax% 26.5% NetInc% 23.2%