Friday, April 15, 2016

Fiscal 2Q 2016 Final Estimates

As of yesterday's market close of $112.10, AAPL is trading at a 11.0x multiple on my next-twelve-months EPS estimate (8.1x when excluding next-12m net cash and div).

Pared down FY16 iPhone estimates considerably to align with recent Apple guidance, but heeding management suggestion it's only a short-term dip for a couple of quarters, and rebound to flat/slight unit growth next year. End effect is revised fair value and 1y target to $132/146 (was $140/157).

Expect very aggressive buyback activity during last and current quarter of up to $18b/qtr, partly confirmed by $15.6b debt issuance last quarter. Expect buyback authorization raised to $175b from current $140b by next year with long term debt levels up to $100b from current $78b. Expect a quarterly dividend increase of 11.5% to 58 cents per share.

Detailed estimates:

3mo ending Mar-2016  Rev($M)  GM(%)  EPS($)
-------------------  -------  -----  ------
Analysts consensus    52,050      -   2.00
Apple guide low       50,000   39.0   1.86*
Apple guide high      53,000   39.5   2.07*
Deagol estimates      53,373   39.9   2.11 (5.50b shares)