As of yesterday's close of $131.94, AAPL trades at a 26.6x multiple on my NTM EPS estimate (25.8x when excluding NTM net cash and dividends).
For the annual update on the capital return program, I expect the quarterly dividend will go to 23¢ from 20.5¢ (+12.2%) and $135b added to the roughly $10b remaining by now in the share repurchase authorization ($32b remained by Dec) providing a comfortable cushion to sustain $85-95b annual pace of buybacks.
Last quarter's revenue/EPS growth of 34/64% is absolutely dumbfounding (and obviously not sustainable) for this size of a business, an outlier resulting from last year's impact on production (and demand to a lesser extent) from the pandemic closures. Mid-term (2-3y) revenue growth should decelerate to still remarkably strong low-teens thanks to WFH, homegrown silicon transition, and 5G adoption, leveraged through buybacks to achieve high-teens EPS growth. Longer-term (>3y) revenue growth of high single-digits combined with continued strong buyback pace yields sustainable double-digit EPS growth.
On valuation, I'm sticking with a 22x long-term multiple target for now (trailing lags at 16x but fast catching up by a point per quarter), at least until outlier results of this quarter (and perhaps FY) are behind us, as that's when we'll get better validation of the sustainable long-term growth potential that I'm currently projecting.
Detailed estimates:
3mo ending Mar21 Rev$B GM% $EPS
---------------- ----- ---- ----
Analysts consens 77.1 - 0.98
My estimates 78.2 40.8 1.05 (16.92b shares)
3mo ending Jun21 Rev$B GM% $EPS
---------------- ----- ---- ----
Analysts consens 68.9 - 0.82
Apple gde lo (e) 67.0 40.0 0.80*
Apple gde hi (e) 71.0 41.0 0.91*
My estimates 70.5 40.6 0.89 (16.77b shares)
*EPS guidance ranges derived from other figures provided
by Apple and diluted shares outstanding estimated by me
12m ending Sep21 Rev$B $EPS
---------------- ----- ----
Analysts consens 334.0 4.46
My estimates 337.6 4.63
Valuation
Timeframe NTMfrom $EPS Y/Y Mult Val $* Div Tot
--------- ------- ---- --- ---- --- --- ---- ---
Trail Val Apr2020 4.11 29% 16.0 66 4.4 0.82 71
Frwrd Val Apr2021 4.97 21% 19.5 97 2.7 0.92 100
1y Target Apr2022 5.74 16% 21.2 122 1.8 1.00 125
2y Value! Apr2023 6.41 12% 21.8 140 1.1 1.16 142
*Cash per share balance net of debt and commercial paper
F2Q21 Statements of Operations Revenues F2Q21e F2Q20 Y/Y% -------- ------ ------ ----- iPhone 39,514 28,962 +36.4 Mac 7,934 5,351 +48.3 iPad 6,116 4,368 +40.0 W/H/A 8,220 6,284 +30.8 -------- ------ ------ ----- Products 61,783 44,965 +37.4 Services 16,445 13,348 +23.2 -------- ------ ------ ----- Tot Revs 78,228 58,313 +34.2 Gross Margin Breakdown -------- ------ ------ ----- Products 20,614 13,644 +51.1 Services 11,290 8,726 +29.4 -------- ------ ------ ----- Tot GM 31,903 22,370 +42.6 -------- ------ ------ ----- Prod GM% 33.4% 30.3% +3.0 Svcs GM% 68.7% 65.4% +3.3 -------- ------ ------ ----- Tot GM% 40.8% 38.4% +2.4 Op Expns 10,838 9,517 +13.9 -------- ------ ------ ----- OpIncome 21,065 12,853 +63.9 Op Mrgn% 26.9% 22.0% +4.9 OIE 69 282 -75.4 -------- ------ ------ ----- Pre-Tax 21,134 13,135 +60.9 Tax Rate 16.0% 14.4% +1.6 Tax Prov 3,382 1,886 +79.3 -------- ------ ------ ----- Net Incm 17,753 11,249 +57.8 Net Mrg% 22.7% 19.3% +3.4 Dil Shrs 16,923 17,619 -3.9 -------- ------ ------ ----- EPS $1.05 $0.64 +64.3 Amounts in millions except EPS in dollars and ratios in %
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2 comments:
Your numbers are in line with mine. I do think the multiple expansion should stay in line with its tech peers, especially as they enter new markets over the next few years.
Fiscal Q2 2021:
Total revenue: $79B
EPS: $1.08
Revenue by segment:
iPhone: $39.9B
iPad: $7.5B
Mac: $7.5B
Services: $16B
Wearables/Home/Accessories: $8.1B
Gross margin on total revenue: 39.5%
Thanks for sharing T-dub.
Yes, I’m prepared to extend the expansion to around 25 as long as I’m able to project 10% long term growth in EPS. I just need to get past the craziness of last quarter, see some more normalized growth rates. And last six months or so the market’s been letting me take my sweet time to build a solid case.
On your numbers, looking good! Beyond what you shared, seems to me you’re going with somewhat aggressive guesses for opex, taxes, and/or shares out, in order to get to $1.08 EPS from $31.2b GM. Perhaps give it another check against last cc guidance provided on those figures.
Cheers and best of luck next week.
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