tag:blogger.com,1999:blog-4057266811973629846.comments2024-03-13T11:12:39.070-04:00deagol's AAPL modelDaniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.comBlogger742125tag:blogger.com,1999:blog-4057266811973629846.post-80655939108449899192024-03-01T21:28:55.238-04:002024-03-01T21:28:55.238-04:00Hope everything is well with you, Daniel.
Sacto J...Hope everything is well with you, Daniel.<br /><br />Sacto JoeAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4057266811973629846.post-36268190190015830452023-07-29T21:58:04.671-04:002023-07-29T21:58:04.671-04:00I'm looking forward for your thoughts on Q3 ea...I'm looking forward for your thoughts on Q3 earnings (cash flow and buybacks), and commentary after Luca has given some general color for Q4. Thanks for sharing.<br />TRnoreply@blogger.comtag:blogger.com,1999:blog-4057266811973629846.post-19791103901597760942023-06-28T17:32:04.606-04:002023-06-28T17:32:04.606-04:00Hi Roger,
For long-term investors, I’d hold at th...Hi Roger,<br /><br />For long-term investors, I’d hold at this price or buy dips, maybe hope for any decent retrace of this year’s move, say 170s or 160s. I got targets >200 ‘25 and ~230s ‘27 but of course the further out the hazier the view (most likely upside to those). Maybe sell some covered calls if already happy with what you got and don’t mind getting exercised. For traders, I imagine shorting or puts looks tasty from here, just use stop losses and all that fun risk management. Nobody knows anything ever, including me, so take it all with heaps of salt.Daniel Tellohttps://www.blogger.com/profile/18356162909901960817noreply@blogger.comtag:blogger.com,1999:blog-4057266811973629846.post-78960415873294317342023-06-27T14:19:21.027-04:002023-06-27T14:19:21.027-04:00Hi Daniel, what are your thoughts as PE nears 32x ...Hi Daniel, what are your thoughts as PE nears 32x and share price is already above your April24 target? - Rogerindigoprinthttps://www.blogger.com/profile/00311721436750383941noreply@blogger.comtag:blogger.com,1999:blog-4057266811973629846.post-45691544794782022042023-05-04T13:08:07.867-04:002023-05-04T13:08:07.867-04:00Hi Daniel, thanks for sharing! - RogerHi Daniel, thanks for sharing! - Rogerindigoprinthttps://www.blogger.com/profile/00311721436750383941noreply@blogger.comtag:blogger.com,1999:blog-4057266811973629846.post-62351512036454588322023-04-25T22:50:21.382-04:002023-04-25T22:50:21.382-04:00I'm looking forward to your thoughts this quar...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.Anonhttps://www.blogger.com/profile/04622458193197706662noreply@blogger.comtag:blogger.com,1999:blog-4057266811973629846.post-10564551585877968842023-02-01T15:05:02.486-04:002023-02-01T15:05:02.486-04:00Thanks for sharing your thinking!Thanks for sharing your thinking!Anonhttps://www.blogger.com/profile/04622458193197706662noreply@blogger.comtag:blogger.com,1999:blog-4057266811973629846.post-74584882595190552022023-01-02T18:25:54.115-04:002023-01-02T18:25:54.115-04:00Hi, Daniel,
Thanks for the very welcome reply!
I...Hi, Daniel,<br /><br />Thanks for the very welcome reply!<br /><br />I’ve started thinking of buybacks in terms of ROI from date of share purchase. If there had been no buybacks, then the only way EPS could grow is via an increase in net income/net earnings. But with buybacks, the EPS “grows” since the share count shrinks, and the remaining “pie slices” get bigger (stock splits just cut each slice into smaller slices). I also think of a “slice” as a single original share of stock, pre-split.<br /><br />Bottom line: The ROI on a share bought prior to buybacks is synonymous with the price paid per “slice” prior to buybacks. Yes, you can buy the equivalent of one of those slices today, but while you would also receive today’s EPS, the “cost of investment” (COI?) is much, much smaller for those of us who bought in pre-buyback.<br /><br />As regards buybacks once net cash zero is reached, it also is a “moving target”. I think it’s a fair bet that Apple debt is going to stop growing and even reverse, as the cost of borrowing has gone up dramatically, and shows little indication of returning to the much lower costs seen during the pandemic and earlier. Also, the amount of net cash going towards stock options looks to stay pretty steady. That continual decrease in debt load (as it’s paid off), plus any increase in cash flow (which I expect), means maintaining net cash zero will require off-loading an ever-increasing amount of cash on a continual basis.<br /><br />IOW, since the requirement to dump excess cash - or alternatively to increase debt - will decrease upon reaching net zero cash, then after that point cash would begin to “pile up”. That’s the reason I expect dividends to increase: Apple’s going to be inundated by piling up cash flow.<br /><br />I might add that I fully expect a lot of pressure to be applied to Apple to increase the percentage of cash flow going to dividends. There are two reasons for that: First, a lot of investors like that steady chunk of cash dumping into their accounts, and they’re going to be pushing for it to grow. Second, a lot of those same investors have NO IDEA how it is that buybacks advantage them. They understand cash in their pocket. They are very, very hazy on the long term benefits of buybacks.<br /><br />I have seen this last verified in no uncertain terms on Apple 3.0. It’s understandable, of course; it’s taken me a lot of time and thought to “get” how the benefit works. But it’s just not intuitively obvious, so folks don’t “trust” it.<br /><br />I hope you’re right, though. I much prefer buybacks to dividends, especially at the present level of valuation. Also, I don’t expect that valuation to change soon; too many people are making too much money off of keeping AAPL undervalued, even now.<br /><br />May you have a wonderful 2023!<br /><br />Joe<br />Joe Bland, aka Sacto Joenoreply@blogger.comtag:blogger.com,1999:blog-4057266811973629846.post-3649874518128364212023-01-01T10:09:16.315-04:002023-01-01T10:09:16.315-04:00Hi Joe, Happy New Year! Glad you accidentally stum...Hi Joe, Happy New Year! Glad you accidentally stumbled upon here.<br /><br />As of last September the buybacks have retired 42.6% of the shares that would be outstanding today had Apple not bought and retired them. This includes a few to offset shares issued as employee compensation, and your ownership is now 165% (or an increase of 65%) of the shares you had (and held) since the end of 2012, compared to just under 92% (or 8% dilution) without the buybacks, so the actual benefit is 180% (165/92) or an 80% increase in ownership.<br /><br />The motivation for doing buybacks (tax efficient way to return capital to shareholders) does not disappear once they reach net cash zero. Apple will continue to generate excess cash in droves, so no, the “buyback tap” would not be closed. I expect over $100b in annual buybacks even after net cash zero, and should continue to grow perhaps slightly below free cash flow growth to allow for dividends to grow slightly more.<br /><br />Each investor is free to sell a fraction or all of that additional ownership as they see fit, according to their individual assessment of whether the market price at any given time sufficiently reflects their target valuation for their shares, aligned with their tax planning and timing preferences, and to fund any income needs they may require after paying capital gains tax, if any. Those in non-taxable accounts who choose to reinvest their dividends are not penalized at all (the buybacks are mathematically equivalent to a tax-free reinvestment of dividends), and those on taxable accounts reduce and defer their tax liability on their investment income.<br /><br />Agree about the China issues. Check out my blurb back in April (here https://aaplmodel.blogspot.com/2022/04/fiscal-2q-2022-final-estimates.html ) about manufacturing diversification which many months later became the favorite topic of every analyst and pundit. Last quarter will be affected but the immediate issues are now mostly resolved. The long-term, strategic diversification will take several years, and the goal is not to leave China, but to have alternatives.<br /><br />Best wishes in this new year. Cheers! 🥂🍾Daniel Tellohttps://www.blogger.com/profile/18356162909901960817noreply@blogger.comtag:blogger.com,1999:blog-4057266811973629846.post-89828904755902625922022-12-28T21:31:23.694-04:002022-12-28T21:31:23.694-04:00Hi, Daniel,
I'm taking a hiatus from ped30.co...Hi, Daniel,<br /><br />I'm taking a hiatus from ped30.com for the nonce, and happened upon your site by accident just now. I can't help but look at your last posting and remark on how prescient it was!<br /><br />"The recent market price dip to low-20s multiple offers the now rare opportunity of an average quarterly price below my "fair" (or forward) valuation level..."<br /><br />And at today's 52 week low close, even more so. We're on fixed income, and so can't join in the opportunity directly. Indirectly is another matter. All our AAPL shares (we're 100% AAPL, and have been for almost all of our ~15 years of retirement) were purchased before the Great Recession hit. And with a decade of buybacks under Apple's belt, I've seen how profound this condensation of stock shares has been on those who stick with AAPL through thick and thin.<br /><br />We're approaching 40% buyback, and of course that represents a (100/60= ) 166.6% increase in our "ownership" of an Apple Inc which has not been sitting on its laurels over that decade. Cash flow shows every sign of continuing to grow. Very soon (and sooner because of these low prices), Apple will hit net cash zero (cash=debt), and the "buyback tap" will be closed. The cash flow tsunami will then have to go somewhere, and the likeliest candidate is dividends. On a ROI basis, having bought into AAPL with a cost basis that was already low, and then to see on top of that a 2/3 increase in ROI due to buybacks increasing our remaining share of the EPS spigot, that will be a wonder to behold.<br /><br />I've been trying to clue Apple 3.0 people in on what's heading down the pike for those that have held AAPL over the last several years, and while some get it, others have just closed their ears. But I think they're smart enough even so to hold onto their shares long enough to see Apple's long term plan for its long term investors come to fruition, so they'll see the reward even though they won't understand where it came from.<br /><br />In the meantime, we saw the big pullback coming, and moved more than normal living expense requirements into cash, so we've not been selling at all for almost the whole year. With any luck at all, we'll be able to hang in there for the next few months as well, while this dumb old market figures out that Apple is going to be coming out of all of this smelling like the proverbial rose.<br /><br />China is an issue, of course. But China is, IMHO, between a rock and a hard place concerning Apple. They can't afford to have them leave. IMHO, it's not a coincidence that their Covid stupidity came apart when it started to impact Apple production. And if they're really smart, they'll let Apple vaccinate all its direct and indirect employees with decent American-made vaccines, and work to protect those Apple workplaces like they were their seed-corn - which in a very real way they are.<br /><br />Well, time to get back to some real work! Again, congrats on the long term vision!<br /><br />Joe Bland, aka Sacto Joe<br /><br />Sacto Joenoreply@blogger.comtag:blogger.com,1999:blog-4057266811973629846.post-56200292282057800902022-10-27T21:27:14.065-04:002022-10-27T21:27:14.065-04:00Well done! Again.Well done! Again.Anonhttps://www.blogger.com/profile/04622458193197706662noreply@blogger.comtag:blogger.com,1999:blog-4057266811973629846.post-12066585614856028852022-10-26T12:01:56.486-04:002022-10-26T12:01:56.486-04:00Thank you. 🤞that tomorrow disclose to your expect...Thank you. 🤞that tomorrow disclose to your expectations, and that the forward looking commentary is positive. I expect it to be, relative to the challenges they've faced.Anonhttps://www.blogger.com/profile/04622458193197706662noreply@blogger.comtag:blogger.com,1999:blog-4057266811973629846.post-24844718985220462122022-10-22T15:44:03.800-04:002022-10-22T15:44:03.800-04:00Yes, thank you, from an Anon Bro.😉Yes, thank you, from an Anon Bro.😉Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4057266811973629846.post-57231833095935501562022-10-21T10:06:04.648-04:002022-10-21T10:06:04.648-04:00Hi Anon, thanks for the question and data recap. I...Hi Anon, thanks for the question and data recap. It’s also insightful to look at the historic trends in payout ratio to earnings, and of course the yield. Both of these have declined to almost symbolic levels. Even though as a growth-seeking investor I still prefer the buybacks, I recognize there’s also income needs for many others, and more so recently and in the near future with rising interest rates. The 1% tax on buybacks next year is not a big factor, at least until the share price eventually gets closer to intrinsic value. Even with a 17% raise next year and around 12% in following years that I’m modeling, the dividend would remain the smaller fraction of the huge capital return program, with the bulk destined for buybacks, which I expect will continue to increase in pace with earnings, and of course given management has reiterated with their “net cash zero over time” stated goal.Daniel Tellohttps://www.blogger.com/profile/18356162909901960817noreply@blogger.comtag:blogger.com,1999:blog-4057266811973629846.post-16854827692545099772022-10-20T16:31:24.004-04:002022-10-20T16:31:24.004-04:00Thanks. Can you share some color on the 16% increa...Thanks. Can you share some color on the 16% increase to the dividend? The taxing of buybacks?<br /><br />Divident increases:<br />2012: $0.38 per share (Initiated div)<br />2013: $0.44 (15% increase)<br />2014: $0.47 (8% increase)<br />2015: $0.52 (11% increase)<br />2016: $0.57 (10% increase)<br />2017: $0.63 (11% increase)<br />2018: $0.73 (16% increase)<br />2019 (5% increase)<br />2020 (6% increase $0.82)<br />2021 (7% increase $0.88)<br />2022 (5% increase $0.92) <br /><br />Average 0.10Anonhttps://www.blogger.com/profile/04622458193197706662noreply@blogger.comtag:blogger.com,1999:blog-4057266811973629846.post-15166747928266050662022-07-26T22:40:22.064-04:002022-07-26T22:40:22.064-04:00Thanks, as always!Thanks, as always!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4057266811973629846.post-66665676086640022982022-07-26T11:10:03.703-04:002022-07-26T11:10:03.703-04:00Helpful, as always. Thanks.Helpful, as always. Thanks.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4057266811973629846.post-16340804478921596852022-05-16T17:24:02.022-04:002022-05-16T17:24:02.022-04:00Thanks,
I finally got some time to catch up. I li...Thanks,<br /><br />I finally got some time to catch up. I like your assessment and approach. AAPL may be one of the safest investments in these uncertain times. Now, May 16. 2022, trading below $150, buybacks matter even more for downside protection and upside potential. <br /><br />In a grim downside scenario, AAPL will suffer less than nearly any other asset, including cash. Fred Steinhttps://www.blogger.com/profile/04939715875760219243noreply@blogger.comtag:blogger.com,1999:blog-4057266811973629846.post-30772929096862828202022-04-28T21:26:20.831-04:002022-04-28T21:26:20.831-04:00https://www.ped30.com/2022/04/28/apple-best-worst-...https://www.ped30.com/2022/04/28/apple-best-worst-analysts-q22022/<br /><br />!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4057266811973629846.post-4677759356266695682022-04-28T19:41:58.506-04:002022-04-28T19:41:58.506-04:00Congrats! Congrats!Congrats! Congrats!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4057266811973629846.post-21492348314357883112021-11-23T08:37:22.713-04:002021-11-23T08:37:22.713-04:00Thanks for sharing this. Amazing incites.Thanks for sharing this. Amazing incites.JavaJackhttps://www.blogger.com/profile/03263943961526019485noreply@blogger.comtag:blogger.com,1999:blog-4057266811973629846.post-22317826933182854522021-10-27T19:04:49.396-04:002021-10-27T19:04:49.396-04:00Thanks Daniel!!! I very much appreciate you sharin...Thanks Daniel!!! I very much appreciate you sharing your work. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4057266811973629846.post-40836044140577949262021-10-27T14:36:41.286-04:002021-10-27T14:36:41.286-04:00Hi Cris, the dates are correct. Note the column he...Hi Cris, the dates are correct. Note the column heading, NTMfrom, stands for Next Twelve Months from… hope that clarifies it.Daniel Tellohttps://www.blogger.com/profile/18356162909901960817noreply@blogger.comtag:blogger.com,1999:blog-4057266811973629846.post-85762446510928584532021-10-26T17:30:50.817-04:002021-10-26T17:30:50.817-04:00Thanks for sharing your work.
I was wondering if...Thanks for sharing your work. <br /><br />I was wondering if the dates were accidentally shifted by 1 year in one of your tables?<br /><br />Valuation<br />Timeframe NTMfrom $EPS Y/Y Mult Val $* Div Tot<br />--------- ------- ---- --- ---- --- --- ---- ---<br />Trail Val Oct2020 5.67 74% 18.0 102 3.8 0.85 107<br />Frwrd Val Oct2021 6.42 13% 21.3 137 2.6 0.94 140<br />1y Target Oct2022 7.29 14% 22.6 165 1.8 1.10 168<br />2y Value! Oct2023 8.02 10% 22.9 184 0.9 1.38 186<br /><br />Should the years be 21 -24? <br /><br />Thanks again,<br />CrisCrisnoreply@blogger.comtag:blogger.com,1999:blog-4057266811973629846.post-33250503408635630362021-07-18T09:56:57.283-04:002021-07-18T09:56:57.283-04:00Daniel, thanks for your responses (to me and the A...Daniel, thanks for your responses (to me and the Anonymous brothers :-) )David Emerynoreply@blogger.com