Monday, April 20, 2015

Fiscal 2Q 2015 Final Estimates

As of today's market open of $125.57, AAPL now trades at a 12.7x multiple on my next-twelve-months EPS estimate (10.0x excluding cash and next-12m div).

Refined my Apple Watch estimates but it still involves significant uncertainty. Guessing 21.75m units for the next 12 months at an ASP of $575 driving revenue of $12.5b for its first year, not including $1b from additional bands, accessories and Apple Care. Should roughly double in second year.

Expecting a dividend raise to 53 cents (+13% from 47¢) quarterly, and extension of the share repurchase program to a total $140-150b by end of calendar 2016 (currently at $90b by end of 2015).

Detailed estimates:

3mo ending Mar-2015  Rev($M)  GM(%)  EPS($)
-------------------  -------  -----  ------
Analysts consensus    55,760          2.14
Apple guide low       52,000   38.5   1.88*
Apple guide high      55,000   39.5   2.11*
Deagol estimates      56,155   40.3   2.22 (5.83b shares)

3mo ending Jun-2015  Rev($M)  GM(%)   EPS($)
-------------------  -------  -----   ------
Analysts consensus    46,830           1.67
Apple guide low (e)   44,000   38.0    1.49*
Apple guide high(e)   47,000   39.0    1.71*
Deagol estimates      46,767   39.3    1.71 (5.75b 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   226,440   8.68
Deagol estimates     226,880   8.86

Valuation  (fwd-12mo from)  EPS($)  Y/Y  10x  Cash* Div  Tot
--------------------------  ------  ---  ---  ----  ---  ---
Trailing        (Apr-2014)    7.98  33%   80    25    2  106
Fair value      (Apr-2015)    9.92  24%   99    25    2  126
1yr target      (Apr-2016)   12.08  22%  121    30    3  153

* Cash/share balance net of long-term debt

(click to enlarge)

F2Q15 Revenue breakdown (millions, except ASP):
iPhone    38,039 (58.0 × $656)
iPad       5,315 (13.0 × $409)
Mac        5,898 (4.65 × $1,268)
Services   5,019
Other      1,884

Income statement (millions, except EPS):
Revenue   56,155
COGS      33,541
GM        22,613  40.3%
OpEx       5,431
OpInc     17,182  30.6%
OI&E         363
Pre-tax   17,546
Tax        4,615  26.3%
NetInc    12,931  23.0%
Shrs.      5,831
EPS       $ 2.22


David Bressler said...

I think I love your forecasts/estimates more than anyone. Just enough information and clarity. Not too dumbed down, not too complicated.

JavaJack said...

I love them, too.

Anonymous said...

I agree wholeheartedly with David's comment and I thank you for these excellent quarterly estimates.

What I think would be interesting is if you went back and looked at your fair value and 1-Yr target estimates for previous quarters and compared those estimates with the actual stock price for those dates. You could then comment on what happened that impacted the differences and how these differences changed your thinking for future estimates.

Daniel Tello said...

Thanks David, Jack, and Anon, for the kind words. Really appreciate it.

Anon, although I mostly focus on the future I of course value accuracy and reliability in the estimates and price targets which requires looking back at that performance in the past. The chart included in this post achieves some of what you suggest in a simple and insightful manner.

A few years ago I posted a much more detailed analysis of the validity of my valuation methodology, and stats on estimates vs. actuals comparisons. Later I shared some specific examples of the challenges involved in predicting both Apple's financial results and their interpretation by the market in a series of comments responding to a similar question. Please check both of those out.

For now, seeing as the market seems currently aligned with my estimates and valuation measures, I'll leave further in-depth analysis of past performance for a time when (not if) a new divergence emerges. But I hope those two instances help you get a sense of the level of uncertainty in estimating Apple and the unpredictability in targeting AAPL (particularly the timing aspect of it).

Always keep in mind that most of what I do is far from hard science and instead involves much intuition, subjectivity and emotion, all distilled into a sort of "feeling" towards deriving useful results, as is the case for all social/behavioral science. Even the cold theoretical finance approach to it, with all its hard math is just probabilistic models, nothing deterministic about it and far from absolute truths.

As always, I advise each and everyone to do their own research, permeated with as many diverse views as possible and come to their own conclusions while still remaining flexible and keeping an open mind about it all.

Thanks again for the supportive comments.