iPhone5 & iPad Mini Are Coming!

Stock (Symbol) Stock Price

Apple (AAPL)


Data is as of Expected to Report Sector

August 30, 2012

Oct 15


Sharek’s Take
David SharekApple is up from $581 to $663 since last quarter, although the numbers are down in this quarter’s research report. What’s dominating headlines is the iPhone 5 and new iPad Mini are coming. September 12th is when the iPhone 5 is expected to be debuted at a press conference, the phone should be on sale in October. The iPad Mini should be on shelves later this fall.

Although the new products should be catalysts for sales and profits, the current outlook just got reduced from last quarter. Last quarter wasn’t as good as expected. The blame was placed on people waiting for the new iPhone 5. Maybe that’s true, but maybe the cause is people already have iPhones and don’t NEED to buy new ones.  AAPL isn’t in hyper growth mode anymore.
One-Year Chart

In the last three quarters AAPL’s P/E has gone from 11 to 12 to now 13.  The stock’s still really cheap.

What’s very different this quarter are profit Estimates. Last quarter we were staring at 84% and 48% growth. Now I see 19% and 12% growth. AAPL isn’t as attractive as it was last quarter.

Earnings Table

Profits increased 32% last quarter but sales grew only 22%. Sales jumped 59% 2QtrsAgo. Sales usually rise in the June quarter, they didn’t this time. This was the worst sales growth in ten quarters.

AAPL missed estimates by almost a dollar. Still, the market didn’t mind, stock’s up.

Annual Profit Estimates fell. This wasn’t a good quarter. AAPL’s fiscal year ends this quarter, so I will use 2013 estimates to calculate a P/E.

Quarterly estimates don’t look so great now. Hypergrowth is over.

Fair Value
I’m taking my Fair Value down from 35 to 25 times earnings — stock’s still worth double than it’s selling for.
Ten-Year Chart
Stock’s doing great in the ten-year view, but a little extended here. Even if profit growth slows to the 20% range, the P/E of only 13 means there’s not much downside.
Power Ranking Bottom Line
Growth Portfolio

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Apple isn’t as good as it was last quarter, there’s a lot of flaws here. Still the stock is timely and has huge upside. I’m just not smitten with the stock right now.

AAPL is ranked #1 in the 16 stock Growth Portfolio and #2 in the 8 stock Aggressive Growth Portfolio Power Rankings.

Aggressive Growth Portfolio

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