Investors should give Apple's Q1 2013 call 'another look,' Barclays says

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  • Reply 21 of 52
    jragostajragosta Posts: 10,473member
    Moreover, Amazon's sales tax advantage is slowly, but surely eroding in state after state.

    Excellent point. A large part of Amazon's success was that people saved 3-9% of the purchase price when they didn't charge sales tax. That gave them a significant cost advantage over local retailers. With the tax advantage disappearing, their competitive advantage is smaller.
    3479.68 today.

    That was before the earnings release. Profits are down and stock price is up, so the P/E will be much higher than that.
  • Reply 22 of 52
    apple ][apple ][ Posts: 9,233member

    Quote:

    Originally Posted by anantksundaram View Post


    Or, consider a different step: unless you have short-term liquidity needs (in which case, I would feel very badly for you), develop a little patience, and have a longer horizon. image


     


    I have no doubt that both AAPL and AMZN will adjust to their long-run equilibrium value within some reasonable horizon (especially the latter, as they try to hit the EPS for the next fiscal year implied by their Forward P/E ratio -- watch it come down with a thud). 



    Oh, I know, and I do of course agree with you. For the long term, Apple is obviously the far better company. I am just temporarily frustrated by the recent AAPL action, which I'm sure a lot of people are, and it doesn't make it easier when you see ridiculous stuff that makes no sense happening. 


     


    But you're right, patience is a good thing to have.

  • Reply 23 of 52
    jragostajragosta Posts: 10,473member
    "Apple wrote:
    [" url="/t/155705/investors-should-give-apples-q1-2013-call-another-look-barclays-says#post_2267548"]Oh, I know, and I do of course agree with you. For the long term, Apple is obviously the far better company. I am just temporarily frustrated by the recent AAPL action, which I'm sure a lot of people are, and it doesn't make it easier when you see ridiculous stuff that makes no sense happening. 

    But you're right, patience is a good thing to have.

    Yes, but it's a question of how long one must be patient for.

    AMZN's P/E has been stratospheric for years - which means that the investors keep telling themselves that it's going to get better soon. You'd think that after 10 years of sky-high P/E ratios that they'd finally stop believing what the management is telling them.
  • Reply 24 of 52
    tkell31tkell31 Posts: 216member

    Quote:

    Originally Posted by jragosta View Post





    Share price gotten ahead of fundamentals? Surely you jest. Their share price has been stratospheric for years - and there are no fundamentals to speak of. They've earned less than $5 B in their entire history. Apple earns that much in a good month.



    Revolutionary? Like no one ever thought of selling books online before? No one ever had a massive distribution system (ask Walmart to show you their distribution system sometime).



    Your post is a prime example of how ridiculous the evaluations are. Amazon gets a free ride for no good reason while Apple gets torn down no matter how well they do.


     


    I wonder what Barnes and Noble and Best Buy would say about that?  I wonder why people say it is real threat to MC and VISA? It generates half the revenue of Apple at one quarter the market cap and you are going to pretend any company could match it now?  Like no one ever thought of selling smartphones before Apple?  What should it be?  $10 a share because the EPS is so low?  You think margins will never improve and its foray into the cloud will fail as well?  Lol, very far sighted of you.


     


    Geez, I own Apple, I wish some other men did to. This board is like a bunch of children crying about everything.    Amazon gets a free ride WAHHHH!  Apple gets torn down.  Boo hoo, it's investing not a playground.  Your post is a primary example of what big babies post here.  


     


    Ultimately time will tell who was right to invest in which stock and if Apple continues to execute the share price will reflect it so why are your panties in a twist?  You want to sell next week? next month or next year?  Should have sold in Sept if that was the case.

  • Reply 25 of 52
    mvigodmvigod Posts: 172member
    Only thing I took away from the call was no increased dividend. No increased buyback. Basically a "we do not care about shareholders" message from the executives. On that answer alone I sold my stock after 5 years. I do not align with management that does not hold significant stakes in the company they work for and displays a lack of shareholder friendliness. I strongly believed this conference call would be one where shareholders were rewarded. Not so much
  • Reply 26 of 52
    rcfarcfa Posts: 1,124member
    And brokerage houses are complicit in it, e.g. by changing the margin requirements in the midst of it, say by lowering the house margin requirements from 40% to 35% and forcing people to sell stock in the process, increasing pressure on the stock price, such that their speculators in the same company can cash in on their options, particularly when they dump all the forced margin sales on the market in one heap, causing shock waves, driving prices down even further, triggering more forced margin sales, etc.

    What happened in the last few months would be worthy of some SEC investigation....
  • Reply 27 of 52
    mikeb85mikeb85 Posts: 506member

    Quote:

    Originally Posted by tkell31 View Post


     


    I wonder what Barnes and Noble and Best Buy would say about that?  I wonder why people say it is real threat to MC and VISA? It generates half the revenue of Apple at one quarter the market cap and you are going to pretend any company could match it now?  Like no one ever thought of selling smartphones before Apple?  What should it be?  $10 a share because the EPS is so low?  You think margins will never improve and its foray into the cloud will fail as well?  Lol, very far sighted of you.


     


    Geez, I own Apple, I wish some other men did to. This board is like a bunch of children crying about everything.    Amazon gets a free ride WAHHHH!  Apple gets torn down.  Boo hoo, it's investing not a playground.  Your post is a primary example of what big babies post here.  


     


    Ultimately time will tell who was right to invest in which stock and if Apple continues to execute the share price will reflect it so why are your panties in a twist?  You want to sell next week? next month or next year?  Should have sold in Sept if that was the case.



     


    Good post, finally, a little bit of common sense.  

  • Reply 28 of 52
    mikeb85mikeb85 Posts: 506member

    Quote:

    Originally Posted by rcfa View Post



    And brokerage houses are complicit in it, e.g. by changing the margin requirements in the midst of it, say by lowering the house margin requirements from 40% to 35% and forcing people to sell stock in the process, increasing pressure on the stock price, such that their speculators in the same company can cash in on their options, particularly when they dump all the forced margin sales on the market in one heap, causing shock waves, driving prices down even further, triggering more forced margin sales, etc.



    What happened in the last few months would be worthy of some SEC investigation....


     


    Don't want to face a margin call?  Don't trade stocks on margin.  


     


    And you certainly shouldn't be speculating on tech stocks on margin, you should be day trading or something...  

  • Reply 29 of 52
    mikeb85mikeb85 Posts: 506member

    Quote:

    Originally Posted by jragosta View Post





    Yes, but it's a question of how long one must be patient for.



    AMZN's P/E has been stratospheric for years - which means that the investors keep telling themselves that it's going to get better soon. You'd think that after 10 years of sky-high P/E ratios that they'd finally stop believing what the management is telling them.


     


    Look at Amazon's balance sheet...  They're in good shape.  EPS and P/E isn't everything...  

  • Reply 30 of 52
    jragostajragosta Posts: 10,473member
    mikeb85 wrote: »
    Look at Amazon's balance sheet...  They're in good shape.  EPS and P/E isn't everything...  

    Sure. Let's look at balance sheets:

    AMZN
    Total assets: $25 B'
    Total liabilities: $18 B
    Shareholder's Equity $8 B
    Market cap: $118 B (14.7 times Equity)

    Book value per share: $20 B
    Price per share: $282 (14.4 times BV)


    AAPL
    Total assets: $176 B'
    Total liabilities: $58 B
    Shareholder's Equity $118 B
    Market cap: $430 B (3.6 times equity)

    Book value per share $ 135 B
    Price per share: $457 B (3:4 times BV)


    Please explain again how Apple is overpriced but AMZN is not.
  • Reply 31 of 52
    mikeb85mikeb85 Posts: 506member

    Quote:

    Originally Posted by jragosta View Post





    Sure. Let's look at balance sheets:



    AMZN

    Total assets: $25 B'

    Total liabilities: $18 B

    Shareholder's Equity $8 B

    Market cap: $118 B (14.7 times Equity)



    Book value per share: $20 B

    Price per share: $282 (14.4 times BV)





    AAPL

    Total assets: $176 B'

    Total liabilities: $58 B

    Shareholder's Equity $118 B

    Market cap: $430 B (3.6 times equity)



    Book value per share $ 135 B

    Price per share: $457 B (3:4 times BV)





    Please explain again how Apple is overpriced but AMZN is not.


    Did I ever say Apple is overpriced?

  • Reply 32 of 52
    MarvinMarvin Posts: 14,943moderator
    Apple II wrote:
    What kind of retards and crack heads are there on Wall Street!?

    The kind that get rich off other people's money without any liability while other people wonder why it doesn't make sense. It makes perfect sense - the house always wins.
    The Market fears that Apple isn't sticky enough to keep the growth in iDevice sales, and Amazon can just print money with every ebook sold, and people will read more books than the cans of pop they drink in a year, and then amazon will sell them weightloss ebooks as well.

    With Apple being one of the wealthiest companies in the world, it would leave some to wonder how much better they can get to justify the share value going up.

    However, Apple didn't do anything to justify the price dropping from where it was. I can understand if it topped out around $700 and fluctuated but to drop so much in such a short period of time doesn't match up with the health of the company.

    Amazon does have that perpetual attractiveness to a massive variety of shoppers so I can see why people would be positive about it but it would surely have to show signs of making a massive profit. I know people said they could just flip a switch and start making loads of money but not without making themselves less attractive to shoppers.

    Amazon is popular because of the price but that price means their profits are low - 5 year average net margin is 2.7% (currently 0.2%), Apple's is 23%. Anybody can sell products cheap. Putting in place a system that will allow you to sell anything cheap for a long time without going out of business takes effort and it could end up working better than Apple trying to keep delivering products people are willing to pay more for but there's no evidence of that yet.

    Share price should be directly tied to company earnings. If a company is doing well, they don't need the investment so it doesn't matter if the buy price is high. If a company is struggling, their share price drops and people can choose to invest or let it die. That would keep the whole thing much less volatile but that isn't what everyone would like because it's the volatility that keeps the big profits rolling in.
  • Reply 33 of 52
    mikeb85mikeb85 Posts: 506member

    Quote:

    Originally Posted by Marvin View Post



    Share price should be directly tied to company earnings. If a company is doing well, they don't need the investment so it doesn't matter if the buy price is high. If a company is struggling, their share price drops and people can choose to invest or let it die. That would keep the whole thing much less volatile but that isn't what everyone would like because it's the volatility that keeps the big profits rolling in.


     


    Tying share price to earnings is similar to what happens with dividend stocks.  The dividend paid out is a certain percentage of earnings, and the share price adjusts according to the supply/demand of the market, generally in the 4-8 percent (yield) range.  If Apple wants to maintain their share price, they need to increase their dividend, otherwise Apple shares will remain a speculative buy.  


     


    Furthermore, your second sentence makes no sense.  Companies generally don't finance after their IPO, most new shares on the market are the ones granted to employees.  Share price doesn't affect a companies' financial situation whatsoever.  When you 'invest' in a company you're simply buying shares from another seller in the market, not the company itself (unless it's an IPO).    


     


    People who don't understand the market should stay out of it, and if they want to learn, they shouldn't cry foul when something happens that they don't understand.  

  • Reply 34 of 52
    mikeb85mikeb85 Posts: 506member

    Quote:

    Originally Posted by Marvin View Post



    Amazon does have that perpetual attractiveness to a massive variety of shoppers so I can see why people would be positive about it but it would surely have to show signs of making a massive profit. I know people said they could just flip a switch and start making loads of money but not without making themselves less attractive to shoppers.



    Amazon is popular because of the price but that price means their profits are low - 5 year average net margin is 2.7% (currently 0.2%), Apple's is 23%. Anybody can sell products cheap. Putting in place a system that will allow you to sell anything cheap for a long time without going out of business takes effort and it could end up working better than Apple trying to keep delivering products people are willing to pay more for but there's no evidence of that yet.

     


     


    Here's a financial indicator for Amazon that might help explain why investors love it.  From their results yesterday, Operating Cash Flow for the quarter was 5.1 billion, or 24% of revenue, which was a staggering 21 billion dollars.  Also, on their balance sheet, cash and cash equivalents is at 8 billion dollars, and they repurchased 960 million dollars worth of shares in the last 12 months.  

  • Reply 35 of 52
    mikeb85mikeb85 Posts: 506member

    Quote:

    Originally Posted by jragosta View Post





    Sure. Let's look at balance sheets:



    AMZN

    Total assets: $25 B'

    Total liabilities: $18 B

    Shareholder's Equity $8 B

    Market cap: $118 B (14.7 times Equity)



    Book value per share: $20 B

    Price per share: $282 (14.4 times BV)





    AAPL

    Total assets: $176 B'

    Total liabilities: $58 B

    Shareholder's Equity $118 B

    Market cap: $430 B (3.6 times equity)



    Book value per share $ 135 B

    Price per share: $457 B (3:4 times BV)

     


     


    Another thing worth mentioning is that marketcap over shareholders' equity is not a financial indicator.  How many shares are outstanding is not a measure of a companies' success, in fact, less outstanding shares is generally preferred.

  • Reply 36 of 52
    jragostajragosta Posts: 10,473member
    sog35 wrote: »

    Amazons Balance sheet is far from being ideal.  You mention 8 bil in cash.  But you fail to mention that Amazon has 19 billion in current liabilities (cash they own in less than one year) and another 5 billion in long term liabilities.

    Their current assets (cash,inventory, receivables, short term invest) only total 21 billion
    Their current liabilities total 19 Billion.
    That's a net of only 2 billion

    The 5 billion in operating cash flow is more attributed to Amazon not paying their vendors quickly and deferring expenses (capital expenditures)

    So how about Amazons 8 billion in owners equity?  That to is a joke. 7 billion is from property/plant/equipment and another 2.5 billion is Goodwill.  Goodwill = price Amazon paid in excess to what a company is worth.

    So basically on the Balance sheet side when you buy Amazon all you are buying is Property/Plant/Equipement and BS Goodwill.

    You can make the argument that Amazon is GROWING amazingly.  But that's also false.

    Amazon Revenue Growth for year 2011 = 41%
    Amazon Revenue Growth for year 2012 = 27%
    Apple Revenue Growth for year 2012 = 44%

    So Amazon's revenue growth dropped 34% from 2011. 

    In the end, it doesn't matter WHAT metric you use. AAPL is far better than AMZN. Earnings, P/E, price/book, price/sales, price/equity, growth rates, profitability, virtually any metric you could choose. Even future guidance for AAPL is better.

    So the question is why people are willing to pay so much for a company which has only had one profitable year in its history and has such dismal financials while punishing AAPL for a record quarter and better prospects.
  • Reply 37 of 52

    Quote:

    Originally Posted by jragosta View Post





    In the end, it doesn't matter WHAT metric you use. AAPL is far better than AMZN. Earnings, P/E, price/book, price/sales, price/equity, growth rates, profitability, virtually any metric you could choose. Even future guidance for AAPL is better.



    So the question is why people are willing to pay so much for a company which has only had one profitable year in its history and has such dismal financials while punishing AAPL for a record quarter and better prospects.


    You can't compare the two because Apple is valued at 4 times what Amazon is.  I'm merely trying to illustrate why people do value Amazon at ~100 billion, and why some may have chosen to sell Apple stock.  That doesn't mean Amazon is a better company, I'm just trying to illustrate why the market moves the way it does - because it is entirely rational.  


     


    If you want to simply rationalize losing money (if you even have money in the game) then be my guest, I'll continue making money on all the stock exchanges I trade on...  


     


    Save being a fanboy for your favourite sport team, or stock up on iDevices at home, but stock markets are no place for emotional attachment...  

  • Reply 38 of 52
    jragostajragosta Posts: 10,473member
    mikeb85 wrote: »
    You can't compare the two because Apple is valued at 4 times what Amazon is.  I'm merely trying to illustrate why people do value Amazon at ~100 billion, and why some may have chosen to sell Apple stock.  That doesn't mean Amazon is a better company, I'm just trying to illustrate why the market moves the way it does - because it is entirely rational.  

    No, it's not rational.

    AAPL is better in virtually EVERY financial parameter. The future guidance for AAPL is better. Apple has a defensible position - and has recently made a major push into China.

    AMZN, OTOH, is facing stronger competition than it has ever faced as it it losing the sales tax advantage which has been a major driver for them. It's financials are horrible compared to AAPL.

    So explain how it's rational for AMZN to be trading at far higher multiples than AAPL.
  • Reply 39 of 52

    Quote:

    Originally Posted by jragosta View Post





    No, it's not rational.



    AAPL is better in virtually EVERY financial parameter. The future guidance for AAPL is better. Apple has a defensible position - and has recently made a major push into China.



    AMZN, OTOH, is facing stronger competition than it has ever faced as it it losing the sales tax advantage which has been a major driver for them. It's financials are horrible compared to AAPL.



    So explain how it's rational for AMZN to be trading at far higher multiples than AAPL.


    Multiples of what?  Earnings?  Revenues?  I just gave you a bunch of reasons.  Amazon has good revenue, cash flow, cash from operations, they buy back shares (important!), etc...  EPS isn't everything.  They've also got a great business going, great infrastructure, etc...  


     


    Apple is valued fairly when you compare their stock price to ExxonMobil, the only other company with a similar valuation.  The rules are different when your market cap is 100 billion, versus 400+ billion.  


     


    And again, don't compare the two.  It's like the proverbial Apples to Oranges comparison...  

  • Reply 40 of 52
    1- "The market is always right". It doesn't mean that the market value of a given stock is correct, it means that if the stock plummets, you're better off selling while it's flling and buying back before it goes back up. Good luck guessing.

    2- The market, quite obviously, is manipulated by huge players with massive advantages. Unless you're investing over long periods of time (years), you're not playing in a level field.

    3- The market suffers from regulation that makes it less favorable to the small-time investor that should, in a capitalist society, be the morally justified user. This has been adressed quite a few imes in multiple developed countries over the last ten years. Each attempt at better regulation has been met by excessive battlelines from the finance industry and the extremely rich (if this regulation is passed, we will have to leave this country/layoff thousands of workers, etc), and has been dropped. The latest case to my knowledge is the French regulation about high frequency trading, which had a great pre-draft, a useless draft, and is on its way to History's trashcan.
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