As of today's most recent price of $142.50, AAPL trades at a 20.3x multiple on my NTM EPS estimate (19.8x when excluding NTM net cash and dividends).
Kept the long-term (beyond FY24) growth rate for revenue at mid single-digits and EPS back to high single-digits helped by strong margins and buybacks leverage. Some investors have been wondering whether the buyback authorization might stop once the "net cash zero" goal gets reached (we're practically there already at $49b cash net of debt when compared to the market cap near 50x that figure). This concern is just silly. Apple will generate over $90b in free cash flow (excludes capex) this year and that will continue to grow with earnings. Regressing back into the black hole of hoarding it is out of the question, and returning it all through dividends would require an immediate 6x increase on the current level this year, which is ridiculous. However, I do expect a slight pick up in the dividend raise pace to double-digit growth from the mid-high single digits growth of the last several years.
In the short term, last quarter appears to me a temporary plateau in growth, mostly due to one-time manufacturing stoppages and slowing Services growth. However, Services should continue to grow faster than company-wide growth, surpassing 20% share of revenues this year and reaching $100b by 2024. Overall, I expect high single digit/strong double-digit growth in revenues/EPS for the remaining 3 quarters of the Fiscal Year.
Analysts have shifted from a weak first half of 2023 to now expecting a flat or declining full year and even continued weakness into next year, but I think they've overdone it given Apple's historical resiliency during weak economic cycles. In addition, the market valuation has already been reset during last year to reflect more uncertain economic conditions for the next year or two, and this too shall pass, so I'm holding the 24x long-term multiple steady.
Detailed estimates: 3mo ending Dec22 Rev$B GM% $EPS ---------------- ----- ---- ---- Analysts consens 121.2 - 1.94 My estimates 123.6 43.4 2.06 (16.01b shares) 3mo ending Mar22 Rev$B GM% $EPS ---------------- ----- ---- ---- Analysts consens 98.1 - 1.48 Apple gde lo (e) 99.0 42.5 1.53* Apple gde hi (e) 105.0 43.5 1.71* My estimates 105.7 43.1 1.71 (15.88b shares) *EPS guidance ranges derived from other figures provided by Apple and diluted shares outstanding estimated by me 12m ending Sep23 Rev$B $EPS ---------------- ----- ---- Analysts consens 401.9 6.15 My estimates 417.9 6.75 Valuation Timeframe NTMfrom $EPS Y/Y Mult Val $* Div Tot --------- ------- ---- --- ---- --- --- ---- --- Trail Val Jan2022 6.07 1% 22.1 134 3.6 0.91 139 Frwrd Val Jan2023 7.00 15% 23.4 164 3.1 1.04 168 1y Target Jan2024 7.78 11% 23.8 186 2.4 1.17 189 2y Value! Jan2025 8.49 9% 24.0 203 1.6 1.32 206 *Cash per share balance net of debt and commercial paper(click to enlarge)F1Q23 Statements of Operations Revenues F1Q23e F1Q22 Y/Y% -------- ------- ------- ----- iPhone 69,195 71,628 -3.4 Mac 10,086 10,852 -7.1 iPad 8,500 7,248 17.3 W/H/A 15,581 14,701 6.0 -------- ------- ------- ----- Products 103,361 104,429 -1.0 Services 20,260 19,516 3.8 -------- ------- ------- ----- Tot Revs 123,621 123,945 -0.3 Gross Margin Breakdown -------- ------- ------- ----- Products 39,027 40,120 -2.7 Services 14,680 14,123 3.9 -------- ------- ------- ----- Tot GM 53,707 54,243 -1.0 -------- ------- ------- ----- Prod GM% 37.8% 38.4% -0.7 Svcs GM% 72.5% 72.4% 0.1 -------- ------- ------- ----- Tot GM% 43.4% 43.8% -0.3 Op Expns 14,628 12,755 14.7 -------- ------- ------- ----- OpIncome 39,079 41,488 -5.8 Op Mrgn% 31.6% 33.5% -1.9 OIE 256 -247 N/A -------- ------- ------- ----- Pre-Tax 39,335 41,241 -4.6 Tax Rate 16.0% 16.0% -0.0 Tax Prov 6,294 6,611 -4.8 -------- ------- ------- ----- Net Incm 33,041 34,630 -4.6 Net Mrg% 23.9% 24.7% -0.7 Dil Shrs 16,014 16,519 -3.1 -------- ------- ------- ----- EPS $2.06 $2.10 -1.6 Amounts in millions except EPS in dollars and ratios in %
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2 comments:
Thanks for sharing your thinking!
I'm looking forward to your thoughts this quarter's report, and "guidance" or commentary. And, your AAPL price estimates given you valuation model. MSFT reported, and did well ~ near 9% after hours.
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