Monday, October 25, 2021

Fiscal 4Q 2021 Final Estimates

As of Friday's close of $148.69, AAPL trades at a 23.2x multiple on my NTM EPS estimate (22.6x when excluding NTM net cash and dividends).

Market continues to ignore past scorching growth performance in fear of having seen demand pull-forward so subsequent stagnation or declines must be right around the corner. A slowdown from last year's growth is inevitable, but far from stagnation given the still incipient adoption of the latest drivers (5G, Apple Silicon, new Services) by the billion-plus user base.

Persistent industry-wide component shortages potentially stretching into next year suggests demand remains strong, but somehow still provides yet another "flawless flawgic" catch-22 for naysayers: either demand evaporates as people already got their tech fix, or will be strong but can't meet it due to shortages. This in tandem with the tired threat of regulation punishing any and all success, or the inane taper tantrums as if negative real rates provided an attractive incentive for traders hooked on growth, gives smart and patient investors a great opportunity (wait, no, not crypto).

So the stock is stuck in a rut; the more growth Apple posts the worse the doom gets looking forward, at least until we get past these silly compares and the supply and political handwringing narratives die out (yeah right). More likely, eventually Apple shows over the next few quarters it can still grow sustainably and for the long-term, it keeps printing cash seemingly faster than the Fed, keeps retiring shares and raising the dividend (just a little bit faster please try getting back to 1% yield), and investors are just forced, kicking and screaming, to take their higher-priced medicine.

In light of this likely being the last quarter of blistering growth (EPS +77%, +74% LTM), and taking advantage of the wariness of the market, I'll eagerly resume nudging up the projected sustainable valuation multiple, now from 22x to 23x, yet still leaving some room for expansion over the next few quarters just in case Apple's business doesn't implode under the weight of its own success.


Detailed estimates:

3mo ending Sep21  Rev$B   GM%  $EPS
----------------  -----  ----  ----
Analysts consens   84.8     -  1.24
My estimates       86.8  42.0  1.30 (16.64b shares)


3mo ending Dec21  Rev$B   GM%  $EPS
----------------  -----  ----  ----
Analysts consens  119.2     -  1.87
Apple gde lo (e)  118.0  41.0  1.83*
Apple gde hi (e)  123.0  42.0  1.99*
My estimates      124.9  41.9  2.03 (16.49b shares)

*EPS guidance ranges derived from other figures provided
 by Apple and diluted shares outstanding estimated by me


12m ending Sep22  Rev$B  $EPS
----------------  -----  ----
Analysts consens  380.6  5.68
My estimates      412.9  6.42


Valuation
Timeframe  NTMfrom  $EPS  Y/Y  Mult  Val   $*   Div  Tot
---------  -------  ----  ---  ----  ---  ---  ----  ---
Trail Val  Oct2020  5.67  74%  18.0  102  3.8  0.85  107
Frwrd Val  Oct2021  6.42  13%  21.3  137  2.6  0.94  140
1y Target  Oct2022  7.29  14%  22.6  165  1.8  1.10  168
2y Value!  Oct2023  8.02  10%  22.9  184  0.9  1.38  186

*Cash per share balance net of debt and commercial paper

(click to enlarge)

F4Q21 Statements of Operations Revenues F4Q21e F4Q20 Y/Y% -------- ------ ------ ----- iPhone 42,401 26,444 60.3 Mac 9,757 9,032 8.0 iPad 7,386 6,797 8.7 W/H/A 8,937 7,876 13.5 -------- ------ ------ ----- Products 68,480 50,149 36.6 Services 18,292 14,549 25.7 -------- ------ ------ ----- Tot Revs 86,772 64,698 34.1 Gross Margin Breakdown -------- ------ ------ ----- Products 23,722 14,952 58.7 Services 12,756 9,737 31.0 -------- ------ ------ ----- Tot GM 36,478 24,689 47.8 -------- ------ ------ ----- Prod GM% 34.6% 29.8% 4.8 Svcs GM% 69.7% 66.9% 2.8 -------- ------ ------ ----- Tot GM% 42.0% 38.2% 3.9 Op Expns 11,415 9,914 15.1 -------- ------ ------ ----- OpIncome 25,063 14,775 69.6 Op Mrgn% 28.9% 22.8% 6.0 OIE 398* 126 215.7 -------- ------ ------ ----- Pre-Tax 25,460 14,901 70.9 Tax Rate 15.0% 15.0% 0.0 Tax Prov 3,819 2,228 71.4 -------- ------ ------ ----- Net Incm 21,641 12,673 70.8 Net Mrg% 24.9% 19.6% 5.4 Dil Shrs 16,641 17,257 -3.6 -------- ------ ------ ----- EPS $1.30 $0.73 77.1 Amounts in millions except EPS in dollars and ratios in % *F4Q21 OI&E includes a $400m gain as my wild-ass stab at the mark-to-market impact of the $1b invested in $DIDI in 2016, IPO'd in late June, and which likely explains the first-ever mention of a potential mark-to-market impact on OI&E by CFO Luca Maestri during the last call in late July.


4 comments:

Cris said...

Thanks for sharing your work.

I was wondering if the dates were accidentally shifted by 1 year in one of your tables?

Valuation
Timeframe NTMfrom $EPS Y/Y Mult Val $* Div Tot
--------- ------- ---- --- ---- --- --- ---- ---
Trail Val Oct2020 5.67 74% 18.0 102 3.8 0.85 107
Frwrd Val Oct2021 6.42 13% 21.3 137 2.6 0.94 140
1y Target Oct2022 7.29 14% 22.6 165 1.8 1.10 168
2y Value! Oct2023 8.02 10% 22.9 184 0.9 1.38 186

Should the years be 21 -24?

Thanks again,
Cris

Daniel Tello said...

Hi Cris, the dates are correct. Note the column heading, NTMfrom, stands for Next Twelve Months from… hope that clarifies it.

Anonymous said...

Thanks Daniel!!! I very much appreciate you sharing your work.

JavaJack said...

Thanks for sharing this. Amazing incites.