Not Looking Good

Stock (Symbol) Stock Price

Apple (AAPL)


Data is as of Expected to Report Sector

May 1, 2013



Sharek’s Take
David SharekApple’s gone from bring a growth stock to a value stock during the last six months. The problem is AAPL’s been falling as the stock’s changed hands from growth money managers to value guys. Now it seems the bottom is already behind us — the stock’s rallied 50 points in two weeks — but now profits are falling and estimates are declining. I’m sorry to say, it doesn’t look like AAPL is getting back to $700 soon. I feel the stock’s going to go up a bit more and then the rally will stall. 
One-Year Chart

AAPL_2013_Q2Profit growth has been bad the past two months and that trend looks to continue. 2013 profits are not set to come in below 2012’s. Yes, the P/E is only 11 but I think this can only rise to 13 or 14 because of the profit picture.

Earnings Table

AAPL_2013_Q2_EPSSales rose 11% last quarter but profit margins are falling because AAPL doesn’t have state-of-the-art products anymore which can command premium prices, thus profits fell 18%.
AAPL missed by 15 cents but this figure had been in decline an entire year.
Annual Profit Estimates are free falling. 2013 estimates are dropping $5 each quarter. AAPL might make only $30 this year. We once thought it would make $50.
Quarterly estimates are shot. No growth coming.

Fair Value
AAPL_2013_Q2_FVOptimistically, this stock can go to 13 times earnings because value stocks with dividends are in favor right now. $550 is what investors can hope for this year.
Ten-Year Chart
AAPL_2013_Q2_10yrThis stock has gone from $7 to $443 during the past ten years. AAPL had a median P/E of 14 in 2011 and 13 in 2012. A 13 P/E is fair at this point. AAPL is buying back stock and paying a nice dividend.
60% in Power Ranking Bottom Line
Growth Portfolio

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The stock seems to have bottomed, but the numbers keep getting worse. I once thought AAPL would rally in late July/early August, but not anymore. I sold some AAPL before it reported and will continue to lighten my load on the stock.
AAPL is ranked last in the 15 stock Growth Portfolio and 8 stock Aggressive Growth Portfolio Power Rankings. I will likely sell the stock from the aggressive portfolio if it gets over $500.
Aggressive Growth Portfolio

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