Friday, January 24, 2014

Apple Earnings & Outlook

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January 27th Apple will report on what historically is its best business period of the year. ITZ sees a profit of $14.15 a share on revenue of $57.55 billion for the quarter ended in December, up from earnings of $13.87 a share on $54.5 billion in sales in the same period in 2012.

Look for Apple to report it sold about 55 million iPhones and 22 million iPads. In which they released its iPad Air tablet and expanded the release of the iPhone 5c and 5s to more than 30 countries after the initial launch on Sept. 20.

  ITZ is expecting Apple to continue to deliver with more new products & services in 2014, iPhone 6 will be the major catalyst.

Things started to rock with week when Carl Icahn TWEETED that Apple is “ doing a great disservice to shareholders by not having markedly increased its buyback.” While he chastised Apple for not increasing the amount of cash it plans on returning to its shareholders, Icahn also said he has raised his stake in Apple by $500 million, to more than $3 billion, over the last two weeks.

For the last two quarters, according to Thomson Reuters consensus, the expected EPS and revenue growth rates are 10% for 2014, 10%  in 2015 and 8% for fiscal 2016 eps  and 8%, 7%, and 7% for revenue consensus and again, this is after the Icahn and China Mobile news.

Valuation, trading at 13xs and 11xs 2014 and 2015 EPS for expected growth of 10% and 8%, means AAPL could trade up to 15xs - 18xs forward estimates and still be reasonably valued.

Price to cash-flow ex-cash, AAPL is trading at 7xs and then 10xs free-cash-flow (ex the balance sheet hoard) so the stock is a true value stock with consumer-staple like growth rates.

Carl Icahn places a valuation @ $840 as stated in his letter...

In our opinion, a great example of a “no brainer” in today’s market is Apple. The S&P 500’s price to earnings multiple is 71% higher than Apple’s, and if Apple were simply valued at the same multiple, its share price would be $840, which is 52% higher than its current price."

In the last Apple blog post ITZ wrote..."Apple's price target of $550 by Jan 2014 & a 12 month objective of  $650."  link

click on chart to expand image


itzstockchartz said...

Revenue: $57.6 billion versus $57.43 billion expected by sell-side and $58 billion expected by buy-side analysts

EPS: $14.50 versus $14.08 expected by sell-side analysts and $14.35 expected by buy-side analysts

iPhone units: 51 million versus 54.7 million expected by sell-side analysts and 56-57 million expected by buy-side analysts

iPad units: 26 million versus 25 million expected by sell-side analysts and 24-25 million expected by buy-side analysts
iPod units: 6 million versus 8 million expected by sell-side analysts

Mac units: 4.8 million versus 4.6 million expected by buy-side analysts

March quarter revenue: $42-$44 billion versus $45.74 billion expected by sell-side analysts
iPhone ASP: $637, which is way up, sequentially. Last quarter, iPhone ASP was $577.

iPad ASP: $441, about the same as last quarter when it was $439
Cash: $159 billion, up from $147 billion last quarter. Carl Icahn won't be happy about this.

In after hours trading Apple is trading as low as $501. Itz will see how it behaves tomorrow and most likely add to the position.

itzstockchartz said...

One other note... ITZ is targeting $510ish level to buy...most likely adding 1/4 position. Currently 1/2 position entering $542.25, $553.

itzstockchartz said...

Entered 3rd quarter position $505