Analyzing Apple (AAPL)
January 10, 2008
I recently browsed in an Apple store and it was a surprisingly enjoyable experience: lots of innovative products, lots of customers, and lots of buzzzz. When’s the last time you had fun at a retail store?
Last week, the New York Times reported much the same experience. Go to: http://www.nytimes.com/2007/12/27/business/27apple.html (you might have to register, but everything is free). The Times also reported that Apple’s retail stores are very successful (unlike Dell, Nokia and Sony) accounting for 20% of its sales, some $1.25B out of $6.2B total in its recent 4th quarter, and up 42% from the year before.
The latest Value Line reports that AAPL, in its 4th quarter, sold 2.1M Macintosh computers, 102M iPod music players, and 1.1M iPhones, and ended its FY with overall sales increasing 24% and EPS up 73%. Despite its glowing report, VL without comment lowered its expected EPS growth from 31.0% to 26.5%.
Soooooooooo, I decided to revisit my SSG and here’s what I found:
|
APPLE INC (AAPL) |
Armin-1 |
Armin-2 |
Take Stock Online |
Armin-3 |
|
|
|
|
|
|
|
Data Source |
Hemscott |
Hemscott |
Hemscott |
S&P |
|
Sales Grwth |
20.00% |
20.00% |
15.20% |
20.00% |
|
EPS Growth |
17.00% |
20.00% |
01.57% |
20.00% |
|
High P/E |
35.2 (2003-04 out) |
37.1 (2007 only) |
28.0 (2002, 03, 04, & 06 out) |
39.4 (2007 only) |
|
High Price |
$303.40 |
$362.80 |
$119.02 |
$385.30 |
|
Low P/E |
16.5 (2003-04 out) |
17.8 (2007 only) |
11.4 (2002, 03, 04, & 06 out) |
18.5 (2007 only) |
|
Low Price |
$69.30 |
$70.10 |
$44.92 |
$72.90 |
|
Up-Down |
1.4 |
1.7 |
-.44 (imputed) |
2.2 |
|
Total Return |
13.0% |
15.0% |
-7.7% |
17.6% |
|
Price |
$180.44 |
$180.44 |
$177.64 |
$171.25 |
|
Buy Under |
$134.95 |
$143.28 |
$59.51 |
$151.00 |
|
Data Date |
1-4-08 |
1-4-08 |
???? |
1-8-08 |
CONCLUSIONS:
- Take Stock’s Forecast High Price in the next 5 years is less than AAPL’s current price and therefore TS forecasts a -7.7% Total Return; Take Stock’s $119.02 High Price is also substantially (some 28%) below the low end of Value Line’s High Price estimate of $165-250;
- The analysts are estimating long-term EPS at around 20.0% with Value Line high at 26.5% and First Call, FactSet, and S&P exactly at 20.0%. Zacks is estimating 22.41%, Reuters is 21.67%, and Reuters less 1 Standard Deviation is 16.85% (where I got the 17.00% I used in Armin-1). Take Stock, on the other hand, is estimating a measly 1.57% EPS growth in the next 5 years;
- AAPL has had a big run-up in price and, at $171.25 is close to its 52 week high ($202.96 high and $82.86 low) gaining 35% in the last 6 months;
- AAPL is not close to a SSG Buy and, with Hemscott data, would have to drop to $143 per share (down 20%) to satisfy the NAIC/BI Buy criteria even when I use optimistic judgments as in Armin-2, or drop to $151 (down 12%) with S&P data as in Armin-3. To be a Buy with Take Stock, AAPL’s price would have to drop a whopping 65%, to an unrealistic $59.51 per share.
Armin Fields
