APPLE STOCK

Final estimates for the 4th quarter of 2021


Since closing on Friday at $ 148.69, the AAPL has been trading 23.2x multiple of my NTM EPS estimate (22.6x excluding NTM net cash and dividends).

The market continues to ignore the results of the heated growth so far, for fear that the demand will pull forward, so that later stagnation or falls must be just around the corner. A slowdown from last year’s growth is inevitable, but far from stagnation given the still initial adoption of the latest drivers (5G, Apple Silicon, new services) by a user base of more than a billion.

The persistent shortage of components across the industry that potentially extends to next year suggests that demand remains strong, but somehow still provides another “flawless flaw” for Doorknob-22: either demand disappears as people already have their technical repairs, or it will be strong, but I can’t meet due to scarcity. This in tandem with the weary threat of regulation punishing any success or senseless rage as if negative rates provide an attractive incentive for growth-oriented traders, gives smart and patient investors a great opportunity (wait, no, not crypto).

So the stock is stuck in a rut; the more Apple publishes, the worse the downfall, at least until we get through these stupid comparisons and until the narratives about offerings and political manuscripts die (yes, right). Apple is more likely to eventually show in the next few quarters that it can still grow sustainably in the long run, continue to print cash seemingly faster than the Fed, continue to pull stocks and raise dividends (just a little faster, try to return up to 1% yield ), and investors are only forced, beating and screaming, to take their more expensive drugs.

In light of this probably the last quarter of high growth (EPS + 77%, + 74% LTM), and taking advantage of market caution, I will eagerly continue to encourage the projected multiple sustainable valuation, now from 22x to 23x, but still leaves little room for expansion in the next few quarters just in case Apple’s business doesn’t fail under the burden of its own success.

Detailed estimates:

3mo ending Sep21  Rev$B   GM%  $EPS
----------------  -----  ----  ----
Analysts consens   84.8     -  1.24
My estimates       86.8  42.0  1.30 (16.64b shares)


3mo ending Dec21  Rev$B   GM%  $EPS
----------------  -----  ----  ----
Analysts consens  119.2     -  1.87
Apple gde lo (e)  118.0  41.0  1.83*
Apple gde hi (e)  123.0  42.0  1.99*
My estimates      124.9  41.9  2.03 (16.49b shares)

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


12m ending Sep22  Rev$B  $EPS
----------------  -----  ----
Analysts consens  380.6  5.68
My estimates      412.9  6.42


Valuation
Timeframe  NTMfrom  $EPS  Y/Y  Mult  Val   $*   Div  Tot
---------  -------  ----  ---  ----  ---  ---  ----  ---
Trail Val  Oct2020  5.67  74%  18.0  102  3.8  0.85  107
Frwrd Val  Oct2021  6.42  13%  21.3  137  2.6  0.94  140
1y Target  Oct2022  7.29  14%  22.6  165  1.8  1.10  168
2y Value!  Oct2023  8.02  10%  22.9  184  0.9  1.38  186

*Cash per share balance net of debt and commercial paper

(click to enlarge)


F4Q21 Statements of Operations Revenues F4Q21e F4Q20 Y/Y% -------- ------ ------ ----- iPhone 42,401 26,444 60.3 Mac 9,757 9,032 8.0 iPad 7,386 6,797 8.7 W/H/A 8,937 7,876 13.5 -------- ------ ------ ----- Products 68,480 50,149 36.6 Services 18,292 14,549 25.7 -------- ------ ------ ----- Tot Revs 86,772 64,698 34.1 Gross Margin Breakdown -------- ------ ------ ----- Products 23,722 14,952 58.7 Services 12,756 9,737 31.0 -------- ------ ------ ----- Tot GM 36,478 24,689 47.8 -------- ------ ------ ----- Prod GM% 34.6% 29.8% 4.8 Svcs GM% 69.7% 66.9% 2.8 -------- ------ ------ ----- Tot GM% 42.0% 38.2% 3.9 Op Expns 11,415 9,914 15.1 -------- ------ ------ ----- OpIncome 25,063 14,775 69.6 Op Mrgn% 28.9% 22.8% 6.0 OIE 398* 126 215.7 -------- ------ ------ ----- Pre-Tax 25,460 14,901 70.9 Tax Rate 15.0% 15.0% 0.0 Tax Prov 3,819 2,228 71.4 -------- ------ ------ ----- Net Incm 21,641 12,673 70.8 Net Mrg% 24.9% 19.6% 5.4 Dil Shrs 16,641 17,257 -3.6 -------- ------ ------ ----- EPS $1.30 $0.73 77.1 Amounts in millions except EPS in dollars and ratios in % *F4Q21 OI&E includes a $400m gain as my wild-ass stab at the mark-to-market impact of the $1b invested in $DIDI in 2016 which IPO'd in late June, which likely explains the first-ever mention of a potential mark-to-market impact on OI&E by CFO Luca Maestri during the last call in late July.

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Naveen Kumar

Friendly communicator. Music maven. Explorer. Pop culture trailblazer. Social media practitioner.

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