AAPL analysts: pros' telescopic aim low, blogs' eyeball aim true

Tomorrow Apple will report its financial results for Fiscal Q4 2011. My estimates were published a couple weeks ago. Most savvy AAPL investors already know what to expect thanks to the excellent work of Apple 2.0's Philip Elmer-DeWitt, in compiling and contrasting all estimates made by professional analysts working for the biggest banks, brokerages, and financial research institutions, as well as those made by independent (aka bloggers or "amateurs") AAPL analysts.

PED - Our Apple whisper numbers

These days the gap between these two types of analysts has grown immense. According to Yahoo! Finance, Wall Street analysts are expecting EPS of $7.28 on $29.45b in revenue, on average, while PED's compilation of pros shows an EPS average of $7.31. But the 16 independent bloggers/amateurs he polled are expecting EPS of $9.07 (24% higher than pros) on $33.47b in revenue (a cool $4b higher), on average. For the last few quarterly "smackdowns" pitting bloggers vs. pros, PED's been using a "two billion gap" mantra in his titles, which already seemed preposterous. Well the gap has now widened to $4b and it seems to me this trend will continue.

PED - Wall Street still doesn't understand Apple
PED - Bloggers vs. Pros on Apple's Q3: Yet another $2 billion gap

Most financial websites which provide stocks' forward-looking valuation information do so based on Wall Street's professional analysts data. This means widely quoted forward P/E multiples you'll see in almost every article panning (or even recommending) AAPL as a potential investment, are blindly following the blind. Fortunately we have PED's work and the couple dozen independent analysts trying to get a better sense of AAPL's financial performance, and most importantly, sharing and publishing the results.

FY2008: Q2, Q3, Q4
FY2009: Q1, Q2, Q3, Q4
FY2010: Q1, Q2, Q3, Q4
FY2011: Q1, Q2, Q3

Change agent

To suffer woes which Hope thinks infinite;
To forgive wrongs darker than death or night;
    To defy Power, which seems omnipotent;
To love, and bear; to hope till Hope creates
From its own wreck the thing it contemplates;
    Neither to change, nor falter, nor repent;
This, like thy glory, Titan, is to be
Good, great and joyous, beautiful and free;
This is alone Life; Joy, Empire, and Victory!

—Prometheus Unbound, Shelley

Fiscal 4Q 2011 Final Estimates

AAPL now trading at [$381.32] 8.6 times my forward-looking EPS estimate (6.6x ex-cash). Here are some comparisons with previous periods:

Jul 18, 2011: [at $374.65] 10.8 times my forward-looking EPS estimate (8.6x after excluding cash)
Mar 21, 2011: [at $330.67] 10.5 times my fwd EPS estimate (8.3x ex-cash)
Dec 23, 2010: [at $323.60] 12.9 times my fwd EPS estimate (10.5x after excluding cash)
Oct 02, 2010: [at $282.52] 12.7 times my FY2011 EPS (10.5x after excluding cash)
Jun 30, 2010: [at $251.53] 12.1 times my FY2011 EPS (9.8x after excluding cash)

An alternative long-term valuation metric I introduced in my "Get AAPL for free" post from July, which had Apple's cash balance matching the then current share price within 4.5 to 5 years is maintained, with Apple's cash estimated at $381.16 per share for the quarter ending in June 2016. As I pointed out then, it's a very conservative scenario that does not assume any new product category and now involves even more cautiousness with EPS growth slowing down to 10% by then (was 15%). Just trying to somehow align that base case with the current valuation multiple and its implied market sentiment.

The rest of the details:

3mo ending Sep-2011   Rev($M)   EPS($)
-------------------   -------   ------
Apple guidance         25,000     5.50
Analysts consensus     29,110     7.15
Deagol estimates       32,097     8.75

Here's to the crazy ones

Here's to the crazy ones.

   The misfits.
    The rebels.
     The troublemakers.
      The round pegs in the square holes.
The ones who see things differently.

Apple at record high yet cheap as ever

Ok maybe not as cheap as in 2003...

Still, despite the 20%+, 64+ point run in less than a month to a record all-time intraday high today of $374.65, those buying AAPL at that price are still getting it at a near-record low (recent years) valuation multiple of only 10.8 times my forward-looking EPS estimate (8.6x after excluding cash).

Fiscal 3Q 2011 Final Estimates

3mo ending Jun-2011   Rev($M)   EPS($)
-------------------   -------   ------
Apple guidance         23,000     5.03
Analysts consensus     24,920     5.80
Deagol estimates       26,070     6.62