Monday, January 23, 2017

Fiscal 1Q 2017 Final Estimates

As of today's market close of $120.08, AAPL is trading at a 12.5x multiple on my next-twelve-months EPS estimate (8.9x when excluding next-12m net cash and div).

Not trying to guess the timing and details of whatever foreign cash repatriation deal gets done, or what lower corporate tax rate might apply going forward. Nor am I modeling any "protectionism" effects until more definitive developments occur. Unpredictable policy changes should affect everyone, not just Apple, but of course it is Apple that gets singled out and most mentioned in the media. So, to counter that sentiment I'm doing nothing at all to my model until we hear more, especially from Apple management as new administration "official" announcements seem unreliable.

Sell side analysts revenue estimates for the rest of FY17 and FY18 right now seem slightly optimistic for a change, but likely I'm just being a bit conservative. On the other hand I believe they're slightly low on margins. Feels odd to be so close to consensus for the next year or two but as always I have no problem adjusting if actual reports come higher. In any case, valuation remains quite attractive, of course.

Detailed estimates:

3mo ending Dec-2016  Rev($M)  GM(%)  EPS($)
-------------------  -------  -----  ------
Analysts consensus    77,370      -   3.22
Apple guide low       76,000   38.0   3.09*
Apple guide high      78,000   38.5   3.27*
My estimates          78,050   38.7   3.28 (5.33b shares)