As of Friday's close of $115.04, AAPL is trading at a 27.5x multiple on my FY21 EPS estimate (26.6x when excluding NTM net cash and dividends).
I expect record-strong Dec quarter guidance should offset any perceived weakness from roughly inline Sep results due to est. ~$6b iPhone and ~$1b AppleCare revenue push-back (as hinted in last call but perhaps not fully digested by analysts/investors). This offset gets picked up mostly in current 1Q but some also in 2Q ending in March due to late Oct/early Nov launch setting up an unusual 2Q as first full quarter of sales this cycle, a privilege normally reserved for the December quarter.
All product line projections revised upwards over NTM, particularly Mac and iPad which in turn feed back to boost mid/long-term growth for all other revenue segments thanks to my loopy modeling of installed base/ecosystem interdependencies. Modeling very strong NTM iPhone growth due to easy comps, with continued strength over next 2-3 years given 5G rollout spread over several cycles.
Beyond that it's anyone's guess but tentatively allowing for sustainable, long-term growth of high single-digits in revenue and low double-digits in EPS (was mid/high single digits). This boost would then generate enough cashflow to maintain recent ~$75b strong pace of buybacks even after "net cash neutral" goal is met in a few years, yet the higher projected stock price prevents a similar EPS leverage benefit as in recent years at half-price discounts.
As for valuation, such a level of growth if truly sustained long-term (5y) would likely justify further expansion beyond my admittedly conservative 20x multiple, but I've chosen not to bake this in just yet, at least until the more ambitious growth trajectory gets validated over the year or so after the exceptionally scorching March outlier is behind us.
Detailed estimates:
3mo ending Sep20 Rev$B GM% $EPS ---------------- ----- ---- ---- Analysts consens 64.2 - 0.71 My estimates 64.8 37.9 0.73 (17.2b shares) 3mo ending Dec20 Rev$B GM% $EPS ---------------- ----- ---- ---- Analysts consens 100.2 - 1.36 Apple gde lo (e) 100.0 37.5 1.33* Apple gde hi (e) 104.0 38.5 1.45* My estimates 103.2 38.3 1.44 (17.1b shares) *EPS guidance ranges derived from other figures provided by Apple and diluted shares outstanding estimated by me 12m ending Sep21 Rev$B $EPS ---------------- ----- ---- Analysts consens 309.8 3.87 My estimates 326.3 4.18 Valuation Timeframe NTMfrom $EPS Y/Y Mult Val $* Div Tot --------- ------- ---- --- ---- --- --- ---- --- Trail Val Oct2019 3.26 10% 14.0 46 4.2 0.80 51 Fair Val Oct2020 4.18 28% 17.7 74 3.2 0.87 78 1y Target Oct2021 4.81 15% 19.4 93 2.6 0.96 97 2y Value! Oct2022 5.51 15% 19.9 110 2.1 1.06 113 *Cash per share balance net of debt and commercial paper(click to enlarge)
F4Q20 Statements of Operations Revenues F4Q20e F4Q19 Y/Y% -------- ------ ------ ----- iPhone 29,473 33,362 -11.7 Mac 7,986 6,991 +14.2 iPad 6,011 4,656 +29.1 W/H/A 7,440 6,520 +14.1 -------- ------ ------ ----- Products 50,910 51,529 -1.2 Services 13,922 12,511 +11.3 -------- ------ ------ ----- Tot Revs 64,832 64,040 +1.2 Gross Margin Breakdown -------- ------ ------ ----- Products 15,292 16,291 -6.1 Services 9,280 8,022 +15.7 -------- ------ ------ ----- Tot GM 24,572 24,313 +1.1 -------- ------ ------ ----- Prod GM% 30.0% 31.6% -1.6 Svcs GM% 66.7% 64.1% +2.5 -------- ------ ------ ----- Tot GM% 37.9% 38.0% -0.1 Op Expns 9,830 8,688 +13.1 -------- ------ ------ ----- OpIncome 14,743 15,625 -5.6 Op Mrgn% 22.7% 24.4% -1.7 OIE 90 502 -82.1 -------- ------ ------ ----- Pre-Tax 14,833 16,127 -8.0 Tax Rate 15.0% 15.1% -0.1 Tax Prov 2,225 2,441 -8.9 -------- ------ ------ ----- Net Incm 12,608 13,686 -7.9 Net Mrg% 19.4% 21.4% -1.9 Dil Shrs 17,215 18,081 -4.8 -------- ------ ------ ----- EPS $0.73 $0.76 -3.2 Amounts in millions except EPS in dollars and ratios in %
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