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Apple Inc. Message Board

  • thompson_97 thompson_97 Jan 23, 2013 12:28 PM Flag

    Fifteen Bucks Minimum

    And that is a low minimum.

    The numbers coming out of analysts mouths these days aren't even self-consistent, let alone consistent with the hard evidence.

    For instance, many analysts are expecting in the vicinity of 13.xx or 14.xx EPS for the just passed AAPL quarter. And yet even the most pessimistic expect a 20% increase in iPhone unit sales relative to last year's monster quarter (fourth largest earnings in a quarter by any company ever). Yes, I know they are worried about margins. But AAPL itself, ever conservative, only decreased its margin guidance by 15%. The other thing to worry about is a shifting sales mix towards the older iPhones (4 and 4S) which would bring with it both lower margins and revenue. However, with these factors considered, it seems like the worse case scenario is that the net earnings from iPhone stayed flat year-over-year.

    That leaves iPads. The numbers that the analysts are talking suggest a unit sales of at least 80% year-over-year. And even if the Mini (with lower revenue than its brother) accounted for the majority of the additional units, it is still additive to earnings. In other words, we should see a significant boost to earnings from iPad relative to last year. Assuming for the moment that iPad only accounted for 20% of last year's earnings (iPhone provides the lion's share) that is still going to add a decent chunk... say another 15% of total earnings from last year added back in via relative iPad strength. iPods and Macs probably were flat or declined, but they haven't been significant drivers of profit for years... at least not relative to iPhone initially and now iPad too. Let's assuming a worse case scenario of a 5% ding there to EPS.

    That leaves us with a net total of positive 10% relative to last year. Take last year's 13 and a half, or so, and add on an additional 10%, and there's your fifteen bucks. And that was worse case. I'm really looking for over $17... a stunning record.

    Also guidance 11.

    Sentiment: Strong Buy

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    • I agree with your 10% upside estimate ($14.85 EPS), Thompson, except to point out that CAPEX increase could possibly decrease that growth. It was reported after last Q that Apple has been sinking an unusually large sum into that (forgot the number--it was unexplained--possibly a huge investment in a panel facility, they speculated.) The writer said that without said extra CAPEX, Apple would not have missed analysts' estimates. If this rate of extra spending is maintained, we could see a reduction in the 10% upside. This is fine by me, if the extra CAPEX creates opportunity later. There are also other factors, such as foreign exchange rates (dollar was stronger this year on average). I would be amazed if we see anything close to 17, though I would be delighted to. My upside estimate is 15 (based on just being conservative).

    • Well said. I agree, $15-17 ER and $11+ guidance now that China is a strong factor (even without CM). If we get both of those, I predict $600 AH and $650 tomorrow as the market corrects.

    • thompson-great post--hoping you are in the ballpark with your bullish call--we'll know shortly--always good to read your well writen posts--stick around and keep contributing !!!!

      Sentiment: Strong Buy

    • earnings arent going to determine whether aapl goes up or down, it will be the forward projection the market is waiting for...unless aapl blows away earnings which is doubtful, not with samsung and other companies starting to steal aapl sales...stay on the sidelines till earnings are announced, and if you bought 550 or higher and its too late to sell, good luck

    • Thompson, good to hear from you again.
      As usual, you make sense of the crazy place AAPL finds itself these days.
      Thanks for the dose of reality!

    • I was running a few numbers this morning, and i totally agree. If Apple merely maintains the yoy EPS growth of 24% that they had last quarter that results in EPS in the $17 range. It would add about $3.30 to trailing EPS and bring it to about $47.47. With a PE of 12 gives you a price target of $569. Again this is a low PE, but for some reason the stock's PE has been punished.

    • You know the "X" factor is? China! Apple did not sell one iPhone in last year's 1st Qtr. This is going to be the difference maker this quarter for iPhones. The iPads sales are going to shock Wall Street. You heard it here first!

    • For APPL, the outlook faces the problems of diminished returns and law of large numbers. Competitors stuff are getting better and folks may decide the extra AAPL premium is not worth the difference in elan, elegance, features, quality etc.

      For better or worse, AAPL will move big one way or another, so I put a spread on this one.

      Sentiment: Hold

    • Always good to see your Posts Thompson...many thanks

    • Welcome Thompson97. Haven't seen you in awhile. You are now only 1 of 2 sane people on this board!

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