Apple Inc. Message Board

  • tarzan137 tarzan137 May 16, 2013 4:46 PM Flag

    Think ahead to be ahead of the pack.. article from the street..

    If we assume only an evolutionary upgrade to Apple's product portfolio it provides us with the following assumptions to build a forecast model: 20% annual revenue growth, 36% gross margins, a steady stock rise of $25/quarter, and 29% of profits re-allocated back into a stock buyback over the next ten years. If these four assumptions hold constant, the EPS projections look something like this...
    2013: $45/share
    2014: $57/share
    2015: $72/share
    2016: $91/share
    2017: $117/share
    2018: $150/share
    2019: $196/share
    2020: $261/share
    2021: $355/share
    2022: $501/share
    If Apple continues to fund a similar buyback program over the next 10 years it will reduce the current float from 934 million shares to 419 million shares. As you can see, earnings growth combined with share reduction produces mind blowing results.
    In 2022, Apple projects to earn $501/share. With a P/E of 10 that puts the stock at $5,000. We've all been warned about the law of large numbers but we haven't been alerted to its remedy. A massive buyback like the one Apple recently announced is that remedy. Settling into an annual revenue growth rate of 20% works out just fine if it's accompanied by such a program.

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