Monday, October 17, 2022

Fiscal 4Q 2022 Final Estimates


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).

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.

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.


Detailed estimates:

3mo ending Sep22  Rev$B   GM%  $EPS
----------------  -----  ----  ----
Analysts consens   88.9     -  1.27
My estimates       90.1  42.5  1.35 (16.14b shares)


3mo ending Dec22  Rev$B   GM%  $EPS
----------------  -----  ----  ----
Analysts consens  128.4     -  2.14
Apple gde lo (e)  130.0  42.0  2.27*
Apple gde hi (e)  137.0  43.0  2.39*
My estimates      137.8  42.9  2.42 (15.97b shares)

*EPS guidance ranges derived from other figures provided
 by Apple and diluted shares outstanding estimated by me


12m ending Sep23  Rev$B  $EPS
----------------  -----  ----
Analysts consens  411.9  6.44
My estimates      431.4  7.12


Valuation
Timeframe  NTMfrom  $EPS  Y/Y  Mult  Val   $*   Div  Tot
---------  -------  ----  ---  ----  ---  ---  ----  ---
Trail Val  Oct2021  6.17  10%  21.5  133  3.0  0.90  136
Frwrd Val  Oct2022  7.12  15%  23.2  165  2.5  1.00  169
1y Target  Oct2023  7.61   7%  23.8  181  1.8  1.14  184
2y Value!  Oct2024  8.17   7%  23.9  196  1.1  1.28  198

*Cash per share balance net of debt and commercial paper

(click to enlarge)

F4Q22 Statements of Operations Revenues F4Q22e F4Q21 Y/Y% -------- ------- ------- ----- iPhone 43,593 38,868 12.2 Mac 9,997 9,178 8.9 iPad 7,926 8,252 -4.0 W/H/A 9,444 8,785 7.5 -------- ------- ------- ----- Products 70,959 65,083 9.0 Services 20,133 18,277 10.2 -------- ------- ------- ----- Tot Revs 91,092 83,360 9.3 Gross Margin Breakdown -------- ------- ------- ----- Products 24,289 22,293 9.0 Services 14,437 12,881 12.1 -------- ------- ------- ----- Tot GM 38,726 35,174 10.1 -------- ------- ------- ----- Prod GM% 34.2% 34.3% -0.0 Svcs GM% 71.7% 70.5% 1.2 -------- ------- ------- ----- Tot GM% 42.5% 42.2% 0.3 Op Expns 12,970 11,388 13.9 -------- ------- ------- ----- OpIncome 25,756 23,786 8.3 Op Mrgn% 28.3% 28.5% -0.3 OIE 200 -538 N/A -------- ------- ------- ----- Pre-Tax 25,956 23,248 11.7 Tax Rate 16.0% 11.6% 4.4 Tax Prov 4,153 2,697 54.0 -------- ------- ------- ----- Net Incm 21,803 20,551 6.1 Net Mrg% 23.9% 24.7% -0.7 Dil Shrs 16,142 16,635 -3.0 -------- ------- ------- ----- EPS $1.35 $1.24 9.3 Amounts in millions except EPS in dollars and ratios in %

 

3 comments:

Daniel Tello said...

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.

Anon said...

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.

Anon said...

Well done! Again.