Tuesday, January 15, 2019

Fiscal 1Q 2019 Final Estimates

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).

Projection highlights:

- iPhone revenue growth -10%/+3% in FY 19/20 (cf. -12% in FY16)
- Non-iPhone revenue growth +15%/+9% in FY 19/20
- Overall revenue growth -1%/5% in FY 19/20, mid-low single digits thereafter
- Net income growth -2%/4% in FY 19/20, low single digits thereafter
- Next report raises quarterly dividend to 81/92 cents in 19/20 (+11%/+14%)
- Buybacks of $8b/$60b for Q4/Q1 ($71b remained authorized as of Sep 2018)
- Expand authorization by $75b until March 2020, $65b until 2021, and ~$50b/y thereafter

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.

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.

Detailed estimates:

3mo ending Dec18  Rev$B   GM%  $EPS
----------------  -----  ----  ----
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)