tag:blogger.com,1999:blog-40572668119736298462024-03-13T11:12:39.129-04:00deagol's AAPL modelHere you'll find my latest AAPL estimates based on my financial model of Apple Inc's business. This should not be considered financial advice, do your own diligence, no guarantee from past performance, and all of that, etc. The idea is for you to figure out as much as you can, and when stuck on something just ask me. Enjoy!Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.comBlogger121125tag:blogger.com,1999:blog-4057266811973629846.post-85593637758499320902023-10-30T06:00:00.002-04:002023-10-30T06:00:00.137-04:00Fiscal 4Q 2023 Final Estimates<p>As of Friday's closing price of $168.22, AAPL trades at a 23.8x multiple on my NTM EPS estimate (23.4x when excluding NTM net cash and dividends).</p><p>First of all, sorry for missing last quarter. I had some issues adapting in time to a new version of Excel, still getting used to somewhat annoying new quirks. I should've planned it a couple months before crunch time, my bad.</p><p>Hopefully estimates are about done getting revised down. It wasn't like just a weak quarter or two but more gradual, with the impact mostly felt cumulatively over the last two years. As an illustrative reference point, a year ago I was expecting Rev/EPS for this FY of $431.4b/$7.12, which now ended up at $385.6b/$6.11 (-11%/-14%), and FY24 projected EPS of $7.61 now down to $7.06 (-7%) might still be slightly optimistic. But I feel the downward revisions are getting smaller (see vertical revision arrows in chart detail below).</p><p>Nonetheless, the mid/long-term projection has been more resilient, holding up at mid/high single-digits growth in Rev/EPS, in essence the only change being it stalled for the last couple of years, as the expected post-pandemic growth slowdown turned out more like a pause.</p><p>Product-wise, need a strong lineup for Mac and iPad to overcome this post-pandemic dip. We'll see what tonight's event offers for Mac, but must revitalize iPad in the spring to justify my return to growth next year. Don't expect any discernible impact from Vision Pro for the next 2-3 years. Margins look incredible, driven by continued mix shift into Services.</p><p><br></p><p>Detailed estimates:</p>
<pre>3mo ending Sep23 Rev$B GM% $EPS
---------------- ----- ---- ----
Analysts consens 89.3 - 1.39
My estimates 91.9 44.5 1.45 (15.68b shares)
<span></span></pre><a href="http://aaplmodel.blogspot.com/2023/10/fiscal-4q-2023-final-estimates.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com1tag:blogger.com,1999:blog-4057266811973629846.post-10686159562288191332023-05-04T09:44:00.003-04:002023-05-04T11:57:44.911-04:00Fiscal 2Q 2023 Final Estimates<p>As of today's opening price of $164.89, AAPL trades at a 23.2x multiple on my NTM EPS estimate (22.6x when excluding NTM net cash and dividends).</p><div style="text-align: left;">Capital return program update (my expectations):<br>$90-100b added to buyback authorization<br>$41.7b remained as of Dec and about $17-20b as of April<br>Quarterly dividend raised 13% to 26 cents</div><p style="text-align: left;"><br></p>
<pre style="text-align: left;">Detailed estimates:
3mo ending Mar23 Rev$B GM% $EPS
---------------- ----- ---- ----
Analysts consens 93.0 - 1.43
My estimates 96.1 44.8 1.54 (15.87b shares)
<span></span></pre><a href="http://aaplmodel.blogspot.com/2023/05/fiscal-2q-2023-final-estimates.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com4tag:blogger.com,1999:blog-4057266811973629846.post-10084348710582754152023-02-01T12:02:00.003-04:002023-02-01T12:49:24.959-04:00Fiscal 1Q 2023 Final Estimates<p>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).</p><p>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.</p><p>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 $100b by 2024. Overall, I expect high single digit/strong double-digit growth in revenues/EPS for the remaining 3 quarters of the Fiscal Year.</p><p>Analysts have shifted from a weak first half of 2023 to now expecting a flat or declining full year and even continued weakness into next year, but I think they've overdone it given Apple's historical resiliency during weak economic cycles. In addition, the market valuation has already been reset during last year to reflect more uncertain economic conditions for the next year or two, and this too shall pass, so I'm holding the 24x long-term multiple steady.</p><p><br></p>
<pre>Detailed estimates:
3mo ending Dec22 Rev$B GM% $EPS
---------------- ----- ---- ----
Analysts consens 121.2 - 1.94
My estimates 123.6 43.4 2.06 (16.01b shares)
<span></span></pre><a href="http://aaplmodel.blogspot.com/2023/02/fiscal-1q-2023-final-estimates.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com2tag:blogger.com,1999:blog-4057266811973629846.post-58862895386356481782022-10-17T21:14:00.000-04:002022-10-17T21:14:20.587-04:00 Fiscal 4Q 2022 Final Estimates<p><br></p><p>As of today's closing price of $142.41, AAPL trades at a 20.0x multiple on my NTM EPS estimate (19.5x when excluding NTM net cash and dividends).</p><p>Lowered the long-term (beyond FY23) revenue growth rate by another point or so, now at mid single-digits, yielding mid-high single-digits in long-term EPS growth. New revenue streams won't move the needle for the next 2y and will provide very low visibility of the growth potential even after 3-5y, though the stock price should begin to reflect whatever investors dream up of such long-term potential as soon as we get any announcement, and likely even earlier.</p><p>In the short term, I trimmed 4Q22/FY23 revenue and EPS by $2/4b and 7/5¢ respectively, mostly due to FX. During uncertain times ahead Apple could easily decide to emphasize cash conservation but instead I'm going with a more deliberately opportunistic approach, given the attractive share price, by modeling at least $80b of the $86b remaining buyback authorization over the three quarters ending 2Q23 (totaling over $100b for the year and keeping it there for the next 3 years), as well as a dividend increase for next year comparable to the one done in 2018 (+16%) rather than the single-digits raise seen in the last 3 years. I doubt the 14-week Q1 has been considered much in consensus estimates. This represents 4-8% upside and perhaps explains some/most of my divergence for Q1.</p><p><br></p><p>Detailed estimates:</p>
<pre>3mo ending Sep22 Rev$B GM% $EPS
---------------- ----- ---- ----
Analysts consens 88.9 - 1.27
My estimates 90.1 42.5 1.35 (16.14b shares)
<span></span></pre><a href="http://aaplmodel.blogspot.com/2022/10/fiscal-4q-2022-final-estimates.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com7tag:blogger.com,1999:blog-4057266811973629846.post-46932725247106607372022-07-25T06:18:00.000-04:002022-07-25T06:18:43.028-04:00Fiscal 3Q 2022 Final Estimates<p><br></p><p>As of Friday's closing price of $154.09, AAPL trades at a 21.9x multiple on my NTM EPS estimate (21.3x when excluding NTM net cash and dividends).</p><p>Trimmed revenue projection by 2-3%, partially offset by slightly more patient opex intensity, still results in long-term EPS growth trajectory holding up at high single-digits, so the 24x projected valuation remains valid, even conservative. The recent market price dip to low-20s multiple offers the now rare opportunity of an average quarterly price below my "fair" (or forward) valuation level (thus the blue dashed line in the chart below), something which used to be the case at all times from late 2008 to early 2017 but has only happened once (Jan-Feb 2019) in the last 5 years. Even after a 20% rebound from recent lows, this still seems an exceptional opportunity for long-term investors. As always, I could be wrong, so do your own due diligence and decide according to your particular risk-tolerance profile.</p><p>Detailed estimates:</p><p><br></p>
<pre>3mo ending Jun22 Rev$B GM% $EPS
---------------- ----- ---- ----
Analysts consens 82.6 - 1.16
My estimates 83.9 43.4 1.22 (16.31b shares)
<span></span></pre><a href="http://aaplmodel.blogspot.com/2022/07/fiscal-3q-2022-final-estimates.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com2tag:blogger.com,1999:blog-4057266811973629846.post-75346699850703906112022-04-25T10:32:00.010-04:002023-01-01T09:57:14.874-04:00Fiscal 2Q 2022 Final Estimates<p><br>As of today's current price of $161.57, AAPL trades at a 23.0x multiple on my NTM EPS estimate (22.4x when excluding NTM net cash and dividends).</p><p>The main question for investors is to what extent do the various current global issues (war, pandemic, new lockdowns, supply chain issues, rising cost of capital, inflation, recession, consumers subscription fatigue, regulation, labor activism... did I miss any?) translate into a longer-term headwind on growth beyond the current year or so. It's anyone's guess, so I'll just share my impressions without much justification (you should research those issues and derive your own conclusions). I do not see a long-term effect on demand, but I do believe management must be asking themselves a big, structural question around manufacturing diversification involving a relatively modest but potentially longer-term impact on current cost structures.</p><p>This question is far from exclusive to Apple, impacting the whole electronics industry (and cars, toys, apparel, among many others). The good thing is Apple uniquely has a hefty gross margin cushion from a rising Services mix which allows it to execute almost any product manufacturing transition they may decide to take on with minimal impact on overall profitability. That doesn't mean it would be an easy decision to make, nor easy to execute. It's possible they've already set sail on this course. In any case, don't expect any visibly drastic changes in financial performance, nor dramatic measures or decisions announced. It's a long journey, and the destination isn't necessarily 180 degrees from the current situation. So I've modeled around 1% headwind on the long-term (beyond the next 3-5y) growth projection now at high single-digits, and a bit larger short-term impact over the next quarter or two. I'll leave it at that.</p><p>This is the time Apple always updates their Capital Return Program. A brief review of what it's done so far: $484 billion spent to retire 11.4 billion shares at an average cost of $42.59 per share, so almost quadrupled that investment. I expect at least another $25b spent during last quarter, leaving about $15b authorized for buybacks. So, given current $80b in net cash and projected near $110b in FCF over NTM, I think the authorization should be extended by over $120b more until next year, and the quarterly dividend raised by 13.6% to 25 cents per share from the current 22 cents. However, I wouldn't be surprised if management feels no need to be as aggressive (so as not to tip their hand so much) and instead decide on $100b extra for buybacks and 24 cents for the dividend (+9%).</p><p>As I promised last time, I'm bumping the long-term valuation multiple to 24x, and plan to take it to 25x for the December quarter preview at the earliest, depending on financial results through the rest of the Fiscal Year, and what's announced in the Summer and Fall events.</p><p><br>Detailed estimates:</p><p><br></p>
<pre>3mo ending Mar22 Rev$B GM% $EPS
---------------- ----- ---- ----
Analysts consens 94.0 - 1.43
My estimates 96.8 43.5 1.51 (16.42b shares)
<span></span></pre><a href="http://aaplmodel.blogspot.com/2022/04/fiscal-2q-2022-final-estimates.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com3tag:blogger.com,1999:blog-4057266811973629846.post-85774104127292836332022-01-24T13:10:00.002-04:002022-01-24T13:10:23.547-04:00Fiscal 1Q 2022 Final Estimates<p>As of today's current price of $156.05, AAPL trades at a 23.4<span style="background-color: white; caret-color: rgb(51, 51, 51); color: #333333; font-family: Verdana, Arial, sans-serif; font-size: 13px;">x</span> multiple on my NTM EPS estimate (22.7x when excluding NTM net cash and dividends).</p><p>Consensus growth estimates for FY22 have improved slightly, but still remain well below my estimates. I'm at +11/15% while consensus is 4.5/2.4% rev/EPS growth for the Fiscal Year. The fact that consensus EPS growth is slower than revenue growth proves those are flawed estimates not reflecting the significant leverage from rising gross margins and about 3% lower share count.</p><p>Given the market's recent nervousness as well as last report's inline results, I've decided to leave the long-term target valuation multiple at 23<span style="background-color: white; caret-color: rgb(51, 51, 51); color: #333333; font-family: Verdana, Arial, sans-serif; font-size: 13px;">x</span> for now. If my March quarter estimates align with whatever guidance clues are provided, then I most likely will raise the multiple to 24<span style="background-color: white; caret-color: rgb(51, 51, 51); color: #333333; font-family: Verdana, Arial, sans-serif; font-size: 13px;">x</span> next time, with still one more nudge to 25<span style="background-color: white; caret-color: rgb(51, 51, 51); color: #333333; font-family: Verdana, Arial, sans-serif; font-size: 13px;">x</span> hopefully later this year. I'll leave the discussion of potentially huge upside from new product categories to other analysts, but the effect on financials will be gradual over the next 3-5 years, and not felt this year at all. However, investors should anticipate such effects and most likely bring back the trailing multiple up above 30<span style="background-color: white; caret-color: rgb(51, 51, 51); color: #333333; font-family: Verdana, Arial, sans-serif; font-size: 13px;">x </span>with the stock breaking $200 well ahead of any announcement.</p><p><br></p><p>Detailed estimates:</p><div><br></div>
<pre>3mo ending Dec21 Rev$B GM% $EPS
---------------- ----- ---- ----
Analysts consens 118.4 - 1.89
My estimates 121.3 42.2 1.98 (16.54b shares)
<span>
</span></pre><a href="http://aaplmodel.blogspot.com/2022/01/fiscal-1q-2022-final-estimates.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com0tag:blogger.com,1999:blog-4057266811973629846.post-66913337316711182772021-10-25T09:26:00.004-04:002021-10-25T13:17:27.841-04:00Fiscal 4Q 2021 Final Estimates<p>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).</p><p>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.</p><p>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).</p><p><span></span></p><a href="http://aaplmodel.blogspot.com/2021/10/fiscal-4q-2021-final-estimates.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com4tag:blogger.com,1999:blog-4057266811973629846.post-21560616527554086732021-07-17T13:22:00.000-04:002021-07-17T13:22:15.958-04:00Fiscal 3Q 2021 Final Estimates<p>As of yesterday's close of $146.39, AAPL trades at a 25.1x multiple on my NTM EPS estimate (24.5x when excluding NTM net cash and dividends).</p><p>As the scorching growth period due to last year's covid closures-impacted compares and subsequent extraordinary shifts in technology needs starts subsiding over the current and next couple of quarters, and given the past several months to almost a year of the stock stagnating, the market is likely ready to reassess Apple's future growth expectations and assign a corresponding valuation multiple that reflects this growth potential.</p><p>I believe a long-term base case of 10% EPS growth is sustainable for at least 3-5 years after my mid-term 2-3y more brisk projection detailed below (which stands in contrast to most analysts turning skeptical on much growth or even expecting declines for the next couple of years or so), driven by mid-high single-digits revenue growth compounded with continued pace of buybacks around $100b per year (and likely increasing after 2026).</p><p>Confirmation of the sustainability of growth through new product announcements as well as already announced and visible roadmap resiliency (5G, Silicon, Services adoption) over the next year should easily justify a 25x multiple on forward-looking earnings, so the valuation projection shown at a 22x multiple still has room for upside revisions.</p><p><br></p><p>Detailed estimates:</p>
<pre>3mo ending Jun21 Rev$B GM% $EPS
---------------- ----- ---- ----
Analysts consens 72.9 - 1.00
My estimates 74.2 42.1 1.03 (16.78b shares)
<span>
</span></pre><a href="http://aaplmodel.blogspot.com/2021/07/fiscal-3q-2021-final-estimates.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com8tag:blogger.com,1999:blog-4057266811973629846.post-82254884479348907512021-04-23T06:40:00.004-04:002021-04-23T07:35:53.407-04:00 Fiscal 2Q 2021 Final Estimates<p><br></p><p>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).</p><p>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 $85-95b annual pace of buybacks.</p><p>Last quarter's revenue/EPS growth of 34/64% is absolutely dumbfounding (and obviously not sustainable) for this size of a business, an outlier resulting from last year's impact on production (and demand to a lesser extent) from the pandemic closures. Mid-term (2-3y) revenue growth should decelerate to still remarkably strong low-teens thanks to WFH, homegrown silicon transition, and 5G adoption, leveraged through buybacks to achieve high-teens EPS growth. Longer-term (>3y) revenue growth of high single-digits combined with continued strong buyback pace yields sustainable double-digit EPS growth.</p><p>On valuation, I'm sticking with a 22x long-term multiple target for now (trailing lags at 16x but fast catching up by a point per quarter), at least until outlier results of this quarter (and perhaps FY) are behind us, as that's when we'll get better validation of the sustainable long-term growth potential that I'm currently projecting.</p><p><br></p><p>Detailed estimates:</p>
<pre>3mo ending Mar21 Rev$B GM% $EPS
---------------- ----- ---- ----
Analysts consens 77.1 - 0.98
My estimates 78.2 40.8 1.05 (16.92b shares)
<span></span></pre><a href="http://aaplmodel.blogspot.com/2021/04/fiscal-2q-2021-final-estimates.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com2tag:blogger.com,1999:blog-4057266811973629846.post-89465852505960788612021-01-21T21:10:00.002-04:002021-04-23T07:29:29.046-04:00 Fiscal 1Q 2021 Final Estimates<p><br>As of today's close of $136.87, AAPL is trading at a 30.2x multiple on my NTM EPS estimate (29.4x when excluding NTM net cash and dividends).</p><p>I've extended the model projection a few more years into the future, and what came out is rather remarkable, though not surprising: a new virtuous cycle of self-reinforcing growth has ensued for Apple. Starting NTM due to easy iPhone comps and resilient "work/learn from home" trends, followed over next 2-3 years by 5G and Apple Silicon adoption, further compounding even longer term into all lines due to ecosystem synergies (my so called "loopy" modeling). And all that is even before considering potentially huge initiatives in new devices such as tags and glasses, or new services tackling transportation and health.</p><p>Bear in mind I could be wrong, overly optimistic about iPhone in particular, which if instead stagnates or keeps declining from here, as it has the last 5y amid declining smartphone and PC markets (yet there was a pandemic last year and tariff wars the prior two), it would likely throw a wrench in the cycle's gears. However, I sense the next 5 years won't be as tough as the last. Granted there might be increased regulation, government intervention, and higher taxes, but I think none of it will amount to much in the end. So, on with my rosy picture.</p><span></span><a href="http://aaplmodel.blogspot.com/2021/01/fiscal-1q-2021-final-estimates.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com1tag:blogger.com,1999:blog-4057266811973629846.post-83973453728595480252020-10-25T05:30:00.003-04:002021-04-23T07:29:57.530-04:00Fiscal 4Q 2020 Final Estimates<p>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).</p><p>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.</p><p>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.</p><p>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 ~$75b strong pace of buybacks even after "net cash neutral" goal is met in a few years, yet the higher projected stock price prevents a similar EPS leverage benefit as in recent years at half-price discounts.</p><p>As for valuation, such a level of growth if truly sustained long-term (5y) would likely justify further expansion beyond my admittedly conservative 20x multiple, but I've chosen not to bake this in just yet, at least until the more ambitious growth trajectory gets validated over the year or so after the exceptionally scorching March outlier is behind us.</p><p><br></p><p>Detailed estimates:</p>
<pre>3mo ending Sep20 Rev$B GM% $EPS
---------------- ----- ---- ----
Analysts consens 64.2 - 0.71
My estimates 64.8 37.9 0.73 (17.2b shares)
<span></span></pre><a href="http://aaplmodel.blogspot.com/2020/10/fiscal-4q-2020-final-estimates.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com0tag:blogger.com,1999:blog-4057266811973629846.post-26423344404360135482020-07-24T11:23:00.003-04:002021-04-23T07:30:34.601-04:00Fiscal 3Q 2020 Should Be Last Without My Detailed Guesses<div><br></div><div>At the current price of $369.77, AAPL is trading at a 24.1x multiple on my FY21 EPS estimate (23.1x when excluding FY21 net cash and dividends).</div><div><br></div><div>Once again I don't feel comfortable publishing my detailed guesses for last quarter's numbers and product revenue breakdown. Hopefully I'll be able to share these details for the next report, as I expect Apple to resume providing quarterly guidance next week.</div><div><br></div><div>On valuation, I've extended the projected multiple expansion, now going to 20x (was 18x) over the next 2-3 years. The significant increase in buybacks since 2018 is one of the most important (though seldom discussed) drivers of the valuation expansion. However, after the next couple of years the cash balance will reach within $50b of the stated goal of being "net cash neutral over time" which means the buyback pace will need to slow down a bit to remain sustainable, due to cash flows slightly restrained by potentially higher taxes and some additional tax liabilities coming due in 2023-26.</div><div><br></div><div>The only way to maintain the current buyback pace would be through significantly faster growth of cash from operations than I'm currently projecting for the next few years. Additionally, given the current stock price, buybacks can no longer achieve the same hugely impactful leverage effect as when the stock was significantly undervalued, often at half-priced discounts. So a multiple stabilizing around 20x for the foreseeable future seems appropriate for free cash flow growth slowing into the mid-single-digits after the next 2-3 years.</div><div><br></div><div><br></div><div>Here's just a few specific estimates I can share:</div><div><br></div>
<pre>3mo ending Jun20 Rev$B GM% $EPS
---------------- ----- ---- ----
Analysts consens 51.8 - 2.03
My estimates - 38.7 - (4.34b shares)
<span></span></pre><a href="http://aaplmodel.blogspot.com/2020/07/fiscal-3q-2020-should-be-last-without.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com0tag:blogger.com,1999:blog-4057266811973629846.post-56723489247347014312020-03-13T22:54:00.000-04:002020-04-17T10:30:43.229-04:00Skipping Detailed Quarterly Estimates for Rest of FY 2020<div style="text-align: left;">
<i><br></i></div>
<blockquote class="tr_bq">
<i>In memory of <a href="https://www.legacy.com/guestbooks/commercialappeal/turley-mcfadden-muller-condolences/195090529?cid=full" target="_blank">Turley Muller</a>. You got this one pal.</i></blockquote>
<br>
As of Friday's close of $277.97, AAPL is trading at a 18.0x multiple on my FY21 EPS estimate (16.9x when excluding FY21 net cash and dividends).<br>
<br>
I have no way of figuring out the impact to global demand from various COVID-19 containment and mitigation policies in over 130 countries, neither today nor in a month when I would normally publish these estimates. In fact, I don't think even Apple itself can, so I'm not expecting them to provide guidance for next quarter.<br>
<br>
I don't think Chinese manufacturing was significantly affected beyond a month or so, but the worldwide network of component supply dependencies and the demand uncertainty probably means Apple should be cautious in ramping production of existing and new products until most of the world has gone through this disruption. The flip side is a likely boost to Services revenue and possibly overall margins so long as HW product margins are not affected too much. Also, since demand is not destroyed but postponed, the rebound next year should be quite impressive, even spilling into 2022.<br>
<br>
<a href="http://aaplmodel.blogspot.com/2020/03/skipping-detailed-quarterly-estimates.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com2tag:blogger.com,1999:blog-4057266811973629846.post-43386853727247964062020-01-21T01:07:00.000-04:002020-01-22T05:27:13.341-04:00Fiscal 1Q 2020 Final Estimates<div>
<br>
As of Friday's close of $318.73, AAPL is trading at a 22.0x multiple on my next-twelve-months EPS estimate (20.5x when excluding NTM net cash and dividends).<br>
<br>
What's a fair multiple? I've dealt with this question several times before, so not going to dwell too much on justifying this move. I just wrote 6 long paragraphs on how P/E multiples are convenient but unreliable, a popular but widely misunderstood oversimplification of proper valuation theory, how multiples do relate to DCF modeling, its pitfalls (both PE and DCF), how I've tracked their empirical usefulness over the years, and on and on piling it with thick layers of much dull and dubious import. So I deleted all that (you're welcome).<br>
<br>
My model's trailing multiple is up to 12x by now, and revised to aim for 18x over next 2-3 years (was going for 15x over 3-5y). So it goes higher faster. This remains relatively conservative (and likely rises too slow compared to market swiftness in rerating AAPL) given broad market forward multiples still higher: S&P 500 at 18.7, Tech 22, Cons. Staples 20, Cons. Disc. 22.3 (but beware all these are multi-decade highs). And peer <strike>mega</strike> tera cap tech still much higher.<br>
</div><a href="http://aaplmodel.blogspot.com/2020/01/fiscal-1q-2020-final-estimates.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com7tag:blogger.com,1999:blog-4057266811973629846.post-15461096614604474372019-10-19T06:38:00.000-04:002019-10-19T06:38:26.077-04:00Fiscal 4Q 2019 Final Estimates<br>
As of Friday's close of $236.41, AAPL is trading at a 17.8x multiple on my next-twelve-months EPS estimate (16.2x when excluding NTM net cash and dividends).<br>
<br>
After a brief panic early this year, market is back at previous-2-years-or-so trend of looking ahead a couple of years and pricing in expectations of mid-high single digit growth, mostly driven by more efficient balance sheet and narrative shift to services—even if new ones will take several years to bear fruit—and against loud noise from trade and threats of regulation. This has allowed for a valuation gradually inching up to broad market multiples for the first time in at least 12 years.<br>
<br>
Given this gradually more positive (or rather less negative) sentiment I'm extending my valuation multiple expansion towards 15x (was aiming for 14x) forward-looking EPS plus net cash and dividends over the next 3-5 years. Currently at just 12.5x up from 10x 2.5 years ago, and one point per year expansion rate beginning to slow down after next year.<br>
<br>
Attention to mainstream user needs is a great tactical move on this pre-5G cycle: photography, battery life, speed, and price will sell more iPhones. Free exclusive content is just a nice perk for now but eventually a strong strategic advantage if they have a hit or two.<br>
<br>
<br>
Detailed estimates:<br>
<br>
<br>
<pre><b>3mo ending Sep19 Rev$B GM% $EPS
---------------- ----- ---- ----
</b>Analysts consens 62.9 - 2.83
Apple guide low 61.0 37.5 2.66*
Apple guide high 64.0 38.5 2.96*
My estimates 63.8 38.3 2.93 (4.52b shares)
</pre><a href="http://aaplmodel.blogspot.com/2019/10/fiscal-4q-2019-final-estimates.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com5tag:blogger.com,1999:blog-4057266811973629846.post-19040043795813446352019-07-16T16:09:00.001-04:002019-07-16T16:09:46.237-04:00Fiscal 3Q 2019 Final Estimates<br>
As of today's close of $204.50, AAPL is trading at a 15.5x multiple on my next-twelve-months EPS estimate (14.0x when excluding NTM net cash and dividends).<br>
<br>
Don't get fooled by the most boring quarters, like, ever. Another consecutive "no collapse" quarter is good, means last Q1 adjustments worked. Not sure why WS sees 3% rev decline in Sep after flat or slight growth in June, in any case, strong Q4 guidance may surprise (but no earns growth until Q1).<br>
<br>
Emphasis on intriguing longer-term themes is great. Key behind-the-scenes platform and business model shifts, happening almost in slow-motion, into new services and broader ecosystem relationships eventually will have huge effects on long-term fundamentals, but ironically will be hard to notice for some time and confound most pundits.<br>
<br>
Also hard to explain, so I'll leave it at that.<br>
<br>
<br>
Detailed estimates:<br>
<div>
<br></div>
<br>
<pre><b>3mo ending Jun19 Rev$B GM% $EPS
</b>---------------- ----- ---- ----
Analysts consens 53.4 - 2.10
Apple guide low 52.5 37.0 2.00*
Apple guide high 54.5 38.0 2.21*
My estimates 53.8 37.8 2.15 (4.59b shares)
</pre><a href="http://aaplmodel.blogspot.com/2019/07/fiscal-3q-2019-final-estimates.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com3tag:blogger.com,1999:blog-4057266811973629846.post-22473574599450176682019-04-22T07:59:00.000-04:002019-04-22T08:46:33.623-04:00Fiscal 2Q 2019 Final Estimates<br>
As of Friday's close of $203.86, AAPL is trading at a 15.5x multiple on my next-twelve-months EPS estimate (14.3x when excluding NTM net cash and dividends).<br>
<br>
<br>
Highlights:<br>
<br>
iPhone rev -15%/+2% annual growth in FY 19/20, low single digits thereafter.<br>
Non-iPhone rev +16%/+10% annual growth in FY 19/20, high single digits thereafter.<br>
Total rev -3%/+5% annual growth in FY 19/20, mid single digits thereafter.<br>
Net income -9%/+7% annual growth in FY 19/20, mid single digits thereafter.<br>
Quarterly dividend raised to 81/91 cents (+11%/+12%) in April 19/20.<br>
Buybacks of $49b/$21b for FQ2/FQ3 ($63b authorized up to last Q).<br>
$75b buyback authorization expansion, $80b buyback over 1y ending March 2020.<br>
$65b buyback 1y ending March 2021, approximately $50b/y thereafter.<br>
<br>
<br>
<pre>Detailed estimates:
3mo ending Mar19 Rev$B GM% $EPS
---------------- ----- ---- ----
Analysts consens 57.4 - 2.36
Apple guide low 55.0 37.0 2.18*
Apple guide high 59.0 38.0 2.54*
My estimates 57.7 37.8 2.45 (4.62b shares)
</pre><a href="http://aaplmodel.blogspot.com/2019/04/fiscal-2q-2019-final-estimates.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com0tag:blogger.com,1999:blog-4057266811973629846.post-77880046557645437842019-01-15T05:29:00.000-04:002019-01-17T03:24:42.017-04:00Fiscal 1Q 2019 Final Estimates<br>
As of yesterday's close of $150.00, AAPL is trading at a 11.6x multiple on my next-twelve-months EPS estimate (10.4x when excluding next-12-months net cash and dividends).<br>
<br>
<br>
Projection highlights:<br>
<br>
- iPhone revenue growth -10%/+3% in FY 19/20 (cf. -12% in FY16)<br>
- Non-iPhone revenue growth +15%/+9% in FY 19/20<br>
- Overall revenue growth -1%/5% in FY 19/20, mid-low single digits thereafter<br>
- Net income growth -2%/4% in FY 19/20, low single digits thereafter<br>
- Next report raises quarterly dividend to 81/92 cents in 19/20 (+11%/+14%)<br>
- Buybacks of $8b/$60b for Q4/Q1 ($71b remained authorized as of Sep 2018)<br>
- Expand authorization by $75b until March 2020, $65b until 2021, and ~$50b/y thereafter<br>
<br>
Analysts are modeling insufficient buybacks, or don't believe in net cash zero promises from management, or still hope for big M/A. Implies ~8% upside to consensus EPS estimates.<br>
<br>
My prior forward valuation multiple expansion of 0.25x per quarter will gradually taper starting after current quarter from 12x to 13.5x by 2022. Should be aiming at 15x but need to accomodate market sentiment in order to model future share reduction more accurately.<br>
<br>
<br>
Detailed estimates:<br>
<br>
<pre><b>3mo ending Dec18 Rev$B GM% $EPS
---------------- ----- ---- ----
</b>Analysts consens 84.3 - 4.19
Apple guid revis 84.0 38.0 4.16*
My estimates 84.1 38.0 4.17 (4.77b shares)
</pre><a href="http://aaplmodel.blogspot.com/2019/01/fiscal-1q-2019-final-estimates.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com9tag:blogger.com,1999:blog-4057266811973629846.post-51607608857080260512018-09-10T09:05:00.004-04:002018-10-19T19:11:12.140-04:00Fiscal 4Q 2018 Final Estimates [UPDATED 10/19]<span style="color: #cc0000;"><span style="color: #cc0000;"><br></span></span>
<span style="color: #cc0000;"><span style="color: #cc0000;">[This was </span><span style="caret-color: rgb(204, 0, 0);">originally posted on 9/10. </span>Please see 10/19 update details below. </span><span style="color: #cc0000;">As of today's (10/19) market close of $219.31, AAPL is trading at a 15.0x multiple on my next-twelve-months EPS estimate (13.9x when excluding next-12-months net cash and dividend).</span><span style="color: #cc0000;">]</span><br>
<br>
<br>
Posting a month early and before Wednesday's event, as promised, in order to test my assumptions and intuition into this cycle, as I did last year as well with satisfying results.<br>
<br>
The most uncertain item for me this time is iPhone pricing. I'm modeling a modest reduction from last year prices. Hope Apple can achieve this, as it would allow for a more sustainable boost to unit growth over mid single digits and easily beating the record 231.5m units sold in 2015.<br>
<br>
The other sources of uncertainty are the Mac and iPad product lines. I'm assuming a significant update (finally) to both lines, announced and available for purchase this week. My Mac projections may be optimistic but the effect on total revenue and earnings of any mistake on my part will be limited.<br>
<br>
I expect a strong Apple Watch Series 4 update, helping with continued very strong Other Products revenue growth.<br>
<br>
Finally, I've slightly pared back my buyback intensity estimates, and accelerated the gradual valuation expansion mentioned last quarter from 0.1 to 0.25 quarterly increases in the EPS multiple, which now goes to 15x by 2022. Of course, this more realistic valuation reduces the number of shares Apple will be able to retire, resulting in a moderation of FY19 EPS growth from 30% to 23%. However, this is still well above Wall Street analysts, who continue to underestimate the effect of buybacks given their 15% EPS growth estimates when compared to their 5% revenue growth for next year (I'm at 6% revenue growth).<br>
<br>
<br>
Detailed estimates:<br>
<br>
<pre><b>3mo ending Sep18 Rev$B GM% $EPS
</b>---------------- ----- ---- ----
Analysts consens 61.2 - 2.76
Apple guide low 60.0 38.0 2.67*
Apple guide high 62.0 38.5 2.84*
My estimates 62.0 38.4 2.83 (4.83b shares)
</pre><a href="http://aaplmodel.blogspot.com/2018/09/fiscal-4q-2018-final-estimates.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com3tag:blogger.com,1999:blog-4057266811973629846.post-21333169082147036002018-07-16T07:33:00.000-04:002018-07-17T15:04:41.897-04:00Fiscal 3Q 2018 Final Estimates<br>
As of Friday's market close of $191.33, AAPL is trading at a 13.4x multiple on my next-twelve-months EPS estimate (12.2x when excluding next-12-months net cash and dividend).<br>
<br>
Huge buyback program as predicted. Although didn't specify an extended timeframe, the $110.4b ($10.4b left in previous program and $100b for new program) authorized until next March nearly matched my $115b estimate over the first year. On the other hand, contrary to my hopes for some persuasive punditry dismissal of it all as mere financial engineering and a waste of cash, it seems market participants will just not let Apple steal their shares—unfortunately this means buybacks will retire fewer shares.<br>
<br>
This is the fifth consecutive quarter since the very first time ever that the average quarterly stock price started aligning with my one-year targets at this time last year, and since then the valuation has held steady at about 11x forward EPS plus net cash and dividends. So yes, I've been a bit too skeptic for the last year or so, at first understandably skeptic of tax reform passing as promised—which it didn't—and on time, and later about euphoric market sentiment continuing for as long as it has.<br>
<br>
So, I'm going to capitulate just a bit (now watch the market turn just as I give up). I've decided to gradually shift my valuation formula to use a multiple of 11x. It's not that I worry that my targets aligning with the current average stock prices makes me look bad or bearish (I'm neither). The year-long deviation is perfectly within the expected variance embedded within such a simple valuation heuristic. Normally I would at least hold on to it for another year or so before revising the parameters that fit the pricing data so well for the last 10-15 years.<br>
<br>
But this time there's a wrinkle to deal with when deriving a forecast price for the shares, which is one can no longer attribute all of the deviation to market sentiment even if the fundamentals were correct. Up until now I was able to say, for example, look I guessed EPS and net cash right but the market is valuing that slightly higher or lower than at 10x. But now, because of the huge buybacks, the eventual price path taken has a significant effect on future EPS, so I need to try to be as realistic as possible in the projected price path if I want to claim my projected EPS is not a significant source of error.<br>
<br>
Since my FV projection at 10x would remain well below the market price for several quarters, modeling buybacks on that path would retire more shares, which artificially (as it's clear that won't be the real price paid in the immediate term) boosts EPS growth in the future, and saves on dividends, allowing for a little bit more cash to get used on more buybacks further in the future. The market has shown to be not so dumb and apparently won't allow for a bargain, at least for now. That means those compounding effects mentioned will not be as intense in reality as on an artificially low modeled price path—a path which artificially creeps into the future valuation. In reality it now seems pretty evident that neither the market nor Warren Buffett nor Apple will let such a low price path last for even a couple of weeks—much less several quarters—before acting opportunistically to take advantage of any weakness, and thus swiftly eliminating any blatant pricing opportunity for others. To reiterate, this shift to 11x is just my way of trying to reflect the effect of buybacks on EPS more realistically, and not motivated by market sentiment, impatience, or FOMO.<br>
<br>
Anyway, I'll do the shift to 11x gradually, over 10 quarters (0.1 quarterly increments), starting with last quarter's trailing value at 10.1x. This means my fair value is now based on a 10.5x multiple and my target is on a 10.9x multiple. For now I'll stop at the following quarter at 11x which will be the target for the next report. I'm willing to continue increasing it—over time—perhaps up to 12.5x or so as long as the market continues to price in the buybacks in advance, as it has so far.<br>
<br>
Despite investors holding steady and—as mentioned—pricing buybacks in advance, at least by a year or possibly two, WS analysts are a different animal. Consensus EPS estimates for the next several quarters currently appear to significantly underestimate the effect of buybacks. I see about 15% upside to FY20 EPS expectations due to buybacks alone (my revenue estimates being only slightly higher). Unless analysts are factoring margin declines and/or increasing operating expenses as a percent of revenues, they will have to raise their EPS estimates as Apple continues to brazenly retire well over a hundred million shares each quarter without much regard for the price.<br>
<br>
Fundamentals continue to track as expected, not much to say other than slight iPhone ASP uncertainty for next cycle and beyond, offset by more validation of solid Services and Other Products growth. MBP upgrade helps support healthy current quarter guidance from pent up demand pushing for an all-time-high quarterly record for Mac revenue, and a broad Fall lineup update allows for continuing growth next FY. Beyond FY19, capital return program effect on EPS more than compensates for tougher net income compares due to tax reform boost ending this December.<br>
<br>
For the next report I'll try to repeat last year's experiment of posting a month early, forcing myself to trust in my intuition well before all the new product features and pricing and reviews and customer reception are known, so stay tuned early in September.<br>
<br>
<br>
Detailed estimates:<br>
<br>
<pre>3mo ending Jun18 Rev$B GM% $EPS
---------------- ----- ---- ----
Analysts consens 52.3 - 2.18
Apple guide low 51.5 38.0 2.14*
Apple guide high 53.5 38.5 2.30*
<b>My estimates 52.9 38.4 2.25</b> (4.91b shares)
</pre><a href="http://aaplmodel.blogspot.com/2018/07/fiscal-3q-2018-final-estimates.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com1tag:blogger.com,1999:blog-4057266811973629846.post-72168448416225992272018-04-02T08:05:00.002-04:002018-04-02T08:05:42.276-04:00Fiscal 2Q 2018 Final Estimates<br>
As of Thursday's market close of $167.78, AAPL is trading at a 12.3x multiple on my next-twelve-months EPS estimate (10.8x when excluding next-12m net cash and div).<br>
<br>
The key immediate question for this earnings report is the capital return update, in particular the planned level of share repurchase necessary to achieve management's stated goal of reaching zero net cash balance over time. My relatively straightforward model assumes the bulk of free cash flow (FCF) will be dedicated to buybacks, with a smaller allocation reserved for a steady level of M/A activity, dividend payments, and some debt retirement—as it matures or slightly faster.<br>
<br>
The base level of buybacks required to maintain a constant net cash balance given the projected FCF generation in my model (net of those reserves mentioned) is in the range of $50–55 billion per year. On top of that, in order to deplete the current net cash balance of $163b, at least an additional $150b would have to be spent in buybacks—barring some huge acquisition which I would consider tragically wasteful. Management's statements of doing this “over time” suggests a tender offer is not part of the plan, so to move this mountain of additional repurchases would take several years, at least 3 and likely half a decade. On the other hand, front-loading the spending on buybacks (within what's reasonable and allowed by SEC regulations) optimizes the number of shares retired given that I project an increasing share price, perhaps after a plateau this year. In short, I'm expecting an authorization to a total $500 billion in repurchases since the end of 2012—an increase of nearly $300b (including roughly $115b, $95b, and $75b spent during CY18-20 respectively)—and an additional 2 year extension up to March 2021. I expect further extensions and more modest increases to the program at this time each year.<br>
<br>
As for the quarterly dividends, I expect an increase of 14% from $0.63 to $0.72 per share this year followed by similar increases for the next couple of years, which keeps a fairly constant pace for the total amount spent per year, and then possibly 20% annual increases over the following couple of years to get the yield back above 2%, representing only $2b increases each year in the total amount spent (currently $13b) thanks to the near completion of the extraordinary repurchase activity having achieved its intended effect on the number of shares outstanding. After that, the per share dividend would increase at the same rate that FCF grows, boosted by the compounding effect of the recurring repurchases at over $50b per year.<br>
<br>
Not much has changed in my model about the fundamental business drivers. Of course, market participants are now scrambling to rationalize, atone for, or assign blame on last year's collective super-cycle delusions—which fortunately was never a significant driver in my model. The main changes I've made since last year are higher iPhone ASPs and slightly slower unit growth for this year, partly reversing it for the following cycles with not much consequence in the long term. In my opinion, the confirmation of steady, moderate progress rather than fleeting flashes of hyper growth followed by stagnation or declines is a positive development, as this non-hit-driven path is a much preferable approach to predictable and sustainable growth for Apple and its long-term shareholders.<br>
<br>
Remember, all of the previously discussed potential boost from capital return will, without a doubt, get dismissed by many pundits and naysayers as financial engineering solely for the purpose of artificially supporting the stock for the benefit of management compensation (because they instead much prefer to see Apple bail out Tesla and Netflix so those dreamy businesses can be funded with zero financial risk, and be able to later say, in case those fail, that Apple crippled them). And the unstated but implied premise is absolutely correct: without a fundamentally-driven growth outcome, all of those billions spent on buybacks are nothing but a gigantic waste of the cash. The only way it can have a positive effect is if the stock price eventually rises meaningfully above the price paid (as has been the case for the $176b worth of past buybacks at an average cost of $102 per share). It requires sustainable upside sometime in the future preferably driven by fundamentals, or—perhaps less convincingly—by reversing the current market inefficiency.<br>
<br>
This perennial market skepticism is precisely why I will not yet consider a more sensible valuation multiple for Apple's enterprise value much higher than 10 times earnings. I remain convinced it will take years of solid performance, and coherent, opportunistic and deliberate actions by management before the market allows the value of those decisions to get fully priced into the stock at a market-comparable multiple. Given my current price target and longer term projection (see chart below), it seems likely that the payoff from these next repurchases will be delayed for at least a couple of years. This is no problem—in fact it'd be the best scenario—since the full program will take a few years to execute, and getting an immediate reaction on the stock toward a market-comparable multiple before all that investment gets deployed would work against its potential return.<br>
<br>
In this light, all the annoying handwringing about “the super-cycle's bust” and inane claims of “weak iPhone X” are actually a blessing. It really makes no big difference to Apple's business performance—other than for fiduciary duties—what happens to all that extra unneeded cash or what kind of return it can get out of it, nor does Apple depend on its stock price to fund its operations—as opposed to some other darling companies. Apple will keep all the cash it needs to smoothly run the business, will keep on investing a healthy amount to continue to innovate and grow, and will return the excess to shareholders. And it'll do that the most efficient way—through buybacks. But to us long-term shareholders it does matter a great deal where the stock goes and what it costs us, as it is our money and investment. And to make the best of it, we'd love a dirt-cheap stock for the next couple of years.<br>
<br>
So, I say thank you, pundits and naysayers, for doing our bidding during the next few years (after that I'll promptly go back to despising your deceitful, manipulative ways). With your doggedly dour doomsaying you're helping Apple help us greedy AAPL holders get the best return we can on our investment.<br>
<br>
<br>
Detailed estimates:<br>
<div>
<br></div>
<pre><b>3mo ending Mar-2018 Rev($M) GM(%) EPS($)
------------------- ------- ----- ------
</b>Analysts consensus 61,193 - 2.70
Apple guide low 60,000 38.0 2.61*
Apple guide high 62,000 38.5 2.77*
My estimates 61,702 38.6 2.79 (5.05b shares)
<b>3mo ending Jun-2018 Rev($M) GM(%) EPS($)
------------------- ------- ----- ------
</b>Analysts consensus 52,310 - 2.19
Apple guide low (e) 51,000 38.0 2.17*
Apple guide high(e) 53,000 38.5 2.34*
My estimates 53,155 38.5 2.36 (4.88b shares)
*EPS guidance ranges derived from other figures provided
by Apple and diluted shares outstanding estimated by me
</pre><a href="http://aaplmodel.blogspot.com/2018/04/fiscal-2q-2018-final-estimates.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com3tag:blogger.com,1999:blog-4057266811973629846.post-74473999009833172792018-01-25T10:47:00.004-04:002018-01-25T10:47:58.891-04:00Fiscal 1Q 2018 Final Estimates<br>
As of yesterday's market close of $174.22, AAPL is trading at a 14.1x multiple on my next-twelve-months EPS estimate (11.7x when excluding next-12m net cash and div).<br>
<br>
On tax reform effects, Apple seems to have provisioned past foreign taxes very presciently as the $38b it announced will pay (presumed over 5 years though regulations allow it over 8 years) is very much in line with the foreign tax deferred liability they would have as of December (was $36b as of September). On the going-forward effective rate, I'm modeling a gradual decline from 22% (current quarter) to about 20% in a year, but I can see it going down to 18% depending on many particularly complex details of the new tax treatment for foreign income.<br>
<br>
As for what to do with all the freed-up cash, other than increased R&D and capital spending (mostly already in my model) I'm going with a dividend per share increase of 16% next April and about 20% per year for the following 3 years (raised it 10.5% last year) essentially doubling the current per share amount by 2021 and achieving a 2% yield on my stock price projection. In addition, I model a $110b increase ($35b base annual increase and $75b due to tax reform) to the share repurchase program to a total of $320b through March 2020 (was $210b through March 2019). Assuming my stock price forecast isn't too far off from reality, this would reduce the shares outstanding after the next 3 years to about 4.3b shares, and would limit the incremental total dividend cost to Apple to only about $5b over 3 years (ttm cost is $12.8b).<br>
<br>
On iPhone cycle and all the other products business, seems my experiment last September of taking a shot at it well before it all went down was rather succesful, as my guesses were pretty good, particularly guidance. So no major changes to the fundamental business basis for the model other than another bump to ASPs. Be prepared to see many pundits dismissing all of 2018 positives as mere financial engineering, and an intensification of the already schizophrenic negativity for the next cycle.<br>
<br>
<br>
Detailed estimates:<br>
<div>
<br></div>
<div>
<br></div>
<pre><b>3mo ending Dec-2017 Rev($M) GM(%) EPS($)
</b>------------------- ------- ----- ------
Analysts consensus 86,750 - 3.80
Apple guide low 84,000 38.0 3.61*
Apple guide high 87,000 38.5 3.82*
My estimates 87,358 38.8 3.98 (5.14b shares)
</pre><a href="http://aaplmodel.blogspot.com/2018/01/fiscal-1q-2018-final-estimates.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com6tag:blogger.com,1999:blog-4057266811973629846.post-60817326280265462662017-09-05T02:39:00.004-04:002018-07-16T08:30:31.326-04:00Fiscal 4Q 2017 Final Estimates<br>
As of Friday's market close of $164.05, AAPL is trading at a 15.1x multiple on my next-twelve-months EPS estimate (12.0x when excluding next-12m net cash and div).
<br>
<br>
I decided to challenge myself by posting my final estimates nearly two months instead of the usual two weeks or so before the report because the events during these two months (keynote, launch, ramp, and report) appear to be some of the most influential for Apple in years, with significant details like precise launch timing, product pricing, reception and supply sufficiency, all helpful in correctly estimating the final few days of Fiscal 2017, the initial shape of the much hyped 2018 supercycle, and a first glimpse into the sort of tough compare arguments looking into 2019 that inevitably will be raised as soon as Q1 guidance is provided (in fact this has already been happening).
<br>
<br>
It may seem counter-productive to attempt estimates before all the critical events and information are in the past and can get digested and distilled into my model. Why not just do as usual and incorporate it all in mid October? There'd be absolutely no risk to the accuracy of my final estimates by waiting. On the contrary, coming out early leaves the forecast at the mercy of some of my most subjective, perhaps some conservative, others more hopeful, and possibly even a few strained assumptions. Like, what if the launch is on the last two days of Q4 and not the week before? Or what if Apple announces record-smashing pre-orders or sales that would clearly call for adjustments in both Q4 and Q1 numbers? Or if the event disappoints some tech pundits who take it to the interwebs with rage against Apple? (Ok that one's a given, of course.) Maybe some manufacturing glitch turns up in early October and phones start blowing up in flames? OMG! (Even though Samsung came out nearly unscathed from that, Apple would be crucified. But no, that won't happen.) Or, they call it the iFacePhone? *facepalm*
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<a href="http://aaplmodel.blogspot.com/2017/09/fiscal-4q-2017-final-estimates.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com3tag:blogger.com,1999:blog-4057266811973629846.post-54856656414669837112017-07-17T08:34:00.000-04:002017-07-24T10:48:54.980-04:00Fiscal 3Q 2017 Final EstimatesAs of Friday's market close of $149.04, AAPL is trading at a 14.8x multiple on my next-twelve-months EPS estimate (11.4x when excluding next-12m net cash and div).<br>
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I've not much to say that hasn't been said elsewhere. iPhone 7s/7s+/8/Pro/X is the obvious next catalyst, with an event in early Sep as always, 7s/7s+ available end of Sep and 8/Pro/whatever version available in Oct/Nov. Not going to delve into the arguments about potential changes due to new tech. But please do go and read all about it elsewhere.<br>
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US Dollar finally weakening should be a relief from last few years relentless FX headwinds, at least for Q4 guidance and Dec quarter. Beyond that it's anyone's guess given the shifting expectations on key US policies. Still not baking in anything regarding tax reform (both foreign and domestic) until a more definite timeline is provided by management. Comments last cc about "sometime this year" were likely a bit premature. Looks like a one-two 2018 story about iPhone supercycle and tax reform.<br>
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Fiscal 2019 consensus estimates for at least mid single-digits growth seem key for continued stock appreciation. Those will be publicly available in financial sites after Q4 gets reported (likely on Oct 31). Of course, Dec quarter guidance given that same day is immensely important, but everyone already knows this. Right? Ok. Just remember to also get a peek at 2019 estimates then, and allow a couple weeks for analysts' model updates to trickle through the data services and finally show up in the public sites. In fact, I'll repeat this paragraph verbatim when I post my current quarter estimates around mid-Oct.<br>
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Enjoy the Summer. Big, exciting Fall coming!<br>
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Detailed estimates:<br>
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<pre><b>3mo ending Jun-2017 Rev($M) GM(%) EPS($)
</b>------------------- ------- ----- ------
Analysts consensus 44,920 - 1.57
Apple guide low 43,500 37.5 1.45*
Apple guide high 45,500 38.5 1.61*
<b>My estimates 45,455 38.6 1.62</b> (5.22b shares)
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<pre></pre><a href="http://aaplmodel.blogspot.com/2017/07/fiscal-3q-2017-final-estimates.html#more"></a>Daniel Tellohttp://www.blogger.com/profile/18356162909901960817noreply@blogger.com1