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Apple Inc. Message Board

  • monkey449 monkey449 Jan 27, 2013 6:47 AM Flag

    Apple 2Q last year was abnormally high

    For all those looking for YOY decline in EPS, if that happens it will be due an abnormality in Margin last year of 47%. That has never happened before and will likely never happen again due to a very lucky product cycle/mix that came together. The revenue is modeled to go up around 10% YOY over a very good quarter last year. My personal opinion is that they are low-balling that revenue estimate too but we shall see. I am interpreting the more "realistic guidance" comment from the CC as just meaning is it unrealistic to give a single number instead of a range. So for all those interested, just remember, that last year's EPS crush was due to an out-of-whack high margin number and that Apple's sales are just fine YOY.

    My personal "fair-value" price for AAPL today is $616 based on $44EPS - ttm and a PE ratio of 14 to be just under the S&P historical average. This is ignoring the cash (which, unlike the #$%$ that all-of-a-sudden hate cash, I find GREAT value in) and is not giving AAPL credit for ANY earnings growth. My perspective on 2013 EPS is that AAPL comes in at $46 for this year without any new product or CM pushing an EOY target for me to $644. For 2014, I expect and EPS rise of 15% to just under $53 conservatively and an EOY 2014 price of $741.

    Needless to say, IMHO, AAPL is absurdly undervalued here. They are not spending day-after-day and billions of R&D dollars doing nothing. They come up with another disruptive product and everything I just wrote above will be extremely conservative.

    Just my $.02 this early Sunday Morning.

    Sentiment: Buy

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    • Its all about the guidance, the rest just conversation. Thus the apple has fallen off the tree. My prediction before the earnings was for 450-425 but now another chartists I'll give credit to has called out a broken head/shoulders neckline with a measured move of potential 310 area. Not my call but stock's weakness does appear it can very possible break below 400's. Peace.

    • Assuming 2% growth for 10 years and cash from current operations still funding dividends, the article says I'm looking at $135 in dividends. Hmm...I think I'll stick around and see what the next Mac-, Ipod-, Iphone-, Ipad- type innovation will be. All the best.

    • Just look at last quarter. They did 54 billion in revenue in one less wk. Thats 29% growth yoy. Lets assume they grow 15% yoy for this march quarter (conservative estimate), then we get atleast 44-45 billion in revenue. Just my 2 cents.

      Sentiment: Strong Buy

    • You have an interesting point because even if they made half of that last year the bar was not set too high for this q.
      Saying that APPL had an amazing number which was lost in translation by CNBC and shorts!!.

      Sentiment: Strong Buy

    • Interesting take. Could you expand on the revenue model you reference? Revenue growth in second quarter 2011 was around 83% so 55% doesnt seem that unusual. I dont think there is anyway to spin 4-8% as anything but negative (much like the reaction at the time it was announced).

      My question is why do you see EPS in the 3rd and 4th quarters, historically the worst performing quarters, not being impacted by the declining margins and slowing revenue growth? $46 eps for 2013 seems ridiculously optimistic UNLESS Apple is in fact lowballing the second quarter, but given what was said that would seem odd. In fact if the third and fourth quarter have similar margins to the first and second quarter I would project EPS closer to $40.

      Admittedly I'm taking second quarter numbers, and applying them to the 3rd and 4th quarter (ie 4-8% growth and 38% margins). Given they are normally weaker quarters I dont see why I would use better projections, but if you have any reasons for being more optimistic I would like to read them. Thanks in advance.

      • 1 Reply to tkell31
      • To answer your question generally, I think the margin drop was not a beginning of a trend. We have seen GM lower than this before (2010 had 2 quarters lower). The margins will never hit last years 2Q again unless something crazy happens. The revenue estimates for Q3 and Q4 show around 20%+ growth and I am assuming margins normalize back towards 40% to this past quarter on the conservative side not further contraction. The estimates call for just under $45 and I think we beat that rather easily for the year. I think $40 is almost impossible after close to $14 this past quarter. That would mean under $9/quarter for the rest of the year - I just don't see that happening. I see Q2 at just under $11, Q3 around 10.50 and Q4 at 10.25 without any tweaking for product launches but based only on revenue growth and consistent margins.

        Sentiment: Buy

    • There is no way Apple can sustain 70% margin on their iphone. Majority of earning comes from iphones. If they do not make any new product the EPS can only go down period. I don't see that potential increase in revenue will offset the margin compression. Smartphone is a comodity now and marging will be getting soon to ~20% now no matter if it is samsung nokia or apple.

      Sentiment: Sell

      • 1 Reply to adamoussebus
      • I 100% disagree with you. A "smartphone" has become a digital camera, mp3 player, video camera, ebook reader, etc... all in one. This type of device will NEVER be priced under $400 unsubsidized. In fact, I would argue that without subsidies Apple will do better than Samsung, Nokia and HTC since the buyers will have to be more discerning when they spend that amount of money. The upgrade cycle will lengthen but the prices will not drop that much.

        Sentiment: Buy

    • I've been thinking about them lowballing current revenue estimates. I don't think it would be wise for them to do so. In the past they have sandbagged estimates. The street knew the estimates were #$%$ and came up with what they felt were realistic targets. The single number was given because accuracy didn't matter, so why give a range.

      This was fine when they were growing at an astronomical rate. They could outperform the streets wildly high estimates. As growth slows to 10%/yr this is not fine. That is why they made such a big stink about estimating a range and having earnings fall within that range.

      If they blow out their own estimates the 1st quarter with this new system they lose credibility and the street goes back to assuming estimates are low-balled.

100.35-0.06(-0.06%)May 27 4:00 PMEDT