I couldn't resist taking a little profit today and investing in something more stable. Still have plenty of exposure, but I do think it is possible to see AAPL at $350 next week. I'm having trouble understanding how they could maintain 60% growth much longer; 30% long-term is not a problem in my book, but I can't see the market paying even a 15 P/E for Apple at 30% growth.
In my experience (14 years as an AAPL investor), Apple has to beat the street consensus by at least 10% to sustain a rally. Meaning: if reported earnings are not in the neighborhood of $6.50 we are likely to see a selloff after hours and/or tomorrow. Not that any of this momentary stuff should matter too much to investors. The macro story is that AAPL is on a long term trend towards lower multiples, which means that earnings increases probably will not result in proportional increases in shareholder value.
Also worth keeping in mind is AAPL's strong rally in anticipation of this earnings report, over the last couple of weeks. Sustaining that sort of momentum will require as massive blowout report, something like $7.00 or more with no blemishes on margins, revenues or guidance. That kind of trifecta is rare, even for Apple.
I couldn't resist taking a little profit today and investing in something more stable. Still have plenty of exposure, but I do think it is possible to see AAPL at $350 next week. I'm having trouble understanding how they could maintain 60% growth much longer; 30% long-term is not a problem in my book, but I can't see the market paying even a 15 P/E for Apple at 30% growth.
That of course would be crazy. It's interesting that companies with 10% growth are given multiples higher than what Apple has now. If Apple drops to a 25% growth, it would be worth a 25 multiple.
Over the last few years the markets collectively have been questioning how Apple can sustain annual earnings growth rates above 50%, but the company has managed it just the same. You can argue all you like with market psychology but you will rarely win that argument.
Um, maybe what? (I did cover some ground in that post.)
Quote:
Originally Posted by melgross
That of course would be crazy. It's interesting that companies with 10% growth are given multiples higher than what Apple has now. If Apple drops to a 25% growth, it would be worth a 25 multiple.
If Apple's earnings growth rate dropped to 25% annually, the multiples could also be expected to drop. Investors are already dramatically underpricing Apple's growth rates, so that hardly suggests that they'd start placing a premium on earnings growth if the rate actually declined. What we'd see more likely is a MSFT-like scenario, with multiples falling into the low teens and very dull performance. Value stock. We're already headed that way anyway.
I've been seeing those crazy numbers on a number of sites beginning a bit over a week ago. Some software is bugging out.
Heh. Yeah, who knows what's going on?
Quote:
Apple has moved down to about a buck up. But the overall market is still doing well. I wonder if so e late in for has come out, though I can't find anything, or if profit taking has already begun. Of course, some manipulation ahead of the report is also possible.
I tend to see Apple move in ways, in the short term, opposite of what one might think. I don't pretend to know what the hell I'm talking about, though.
The report is probably going to be fantastic, then the price will drop as people do ... something.
I'm in it for the long haul, though. So little bumps and drops never really concern me that much, since it seems to go up and up, over the long run.
Um, maybe what? (I did cover some ground in that post.)
As I said, maybe. It's not always true, that is, what you were saying. I've seen it go both ways. You're correct, but not for each instance.
Quote:
If Apple's earnings growth rate dropped to 25% annually, the multiples could also be expected to drop. Investors are already dramatically underpricing Apple's growth rates, so that hardly suggests that they'd start placing a premium on earnings growth if the rate actually declined. What we'd see more likely is a MSFT-like scenario, with multiples falling into the low teens and very dull performance. Value stock. We're already headed that way anyway.
in Apples' case, no doubt.
MSs' growth last year was about 8.5%. it's hardly comparable. Their net margins have also been going down over time.
As I said, maybe. It's not always true, that is, what you were saying. I've seen it go both ways. You're correct, but not for each instance.
As have I. It's a rule-of-thumb, not a law. But if I were a betting man, that's how I'd wager. We shall see for this quarter soon enough!
Quote:
in Apples' case, no doubt.
MSs' growth last year was about 8.5%. it's hardly comparable. Their net margins have also been going down over time.
I'm not predicting that AAPL will become MSFT any time soon, but the trend is already in that direction and would only accelerate if Apple started posting earnings gains closer to 25%.
I've been giving that some thought. With Apple spending on patents (twice), getting caught and having to pay for patents (Nokia), plus other large expenses, I think we're further away than ever.
They wouldn't even talk about it at the shareholders meeting. We'll have to see what the cash is this time. If they subtract these expenses then it won't be too much. Or it will simply come out of profits. I keep thinking that it will pull down the bottom line a bit, depending on how much they had to pay right now.
I've been giving that some thought. With Apple spending on patents (twice), getting caught and having to pay for patents (Nokia), plus other large expenses, I think we're further away than ever.
They wouldn't even talk about it at the shareholders meeting. We'll have to see what the cash is this time. If they subtract these expenses then it won't be too much. Or it will simply come out of profits. I keep thinking that it will pull down the bottom line a bit, depending on how much they had to pay right now.
I've never expected a dividend that can't easily be paid out of cash flow. I suspect the objection on the part of the board to paying even a modest dividend is more religious than practical. They always avoid answering that question at stockholder's meeting, so that's nothing new.
Comments
In my experience (14 years as an AAPL investor), Apple has to beat the street consensus by at least 10% to sustain a rally. Meaning: if reported earnings are not in the neighborhood of $6.50 we are likely to see a selloff after hours and/or tomorrow. Not that any of this momentary stuff should matter too much to investors. The macro story is that AAPL is on a long term trend towards lower multiples, which means that earnings increases probably will not result in proportional increases in shareholder value.
Also worth keeping in mind is AAPL's strong rally in anticipation of this earnings report, over the last couple of weeks. Sustaining that sort of momentum will require as massive blowout report, something like $7.00 or more with no blemishes on margins, revenues or guidance. That kind of trifecta is rare, even for Apple.
Maybe.
I couldn't resist taking a little profit today and investing in something more stable. Still have plenty of exposure, but I do think it is possible to see AAPL at $350 next week. I'm having trouble understanding how they could maintain 60% growth much longer; 30% long-term is not a problem in my book, but I can't see the market paying even a 15 P/E for Apple at 30% growth.
That of course would be crazy. It's interesting that companies with 10% growth are given multiples higher than what Apple has now. If Apple drops to a 25% growth, it would be worth a 25 multiple.
Maybe.
Um, maybe what? (I did cover some ground in that post.)
That of course would be crazy. It's interesting that companies with 10% growth are given multiples higher than what Apple has now. If Apple drops to a 25% growth, it would be worth a 25 multiple.
If Apple's earnings growth rate dropped to 25% annually, the multiples could also be expected to drop. Investors are already dramatically underpricing Apple's growth rates, so that hardly suggests that they'd start placing a premium on earnings growth if the rate actually declined. What we'd see more likely is a MSFT-like scenario, with multiples falling into the low teens and very dull performance. Value stock. We're already headed that way anyway.
I've been seeing those crazy numbers on a number of sites beginning a bit over a week ago. Some software is bugging out.
Heh. Yeah, who knows what's going on?
Apple has moved down to about a buck up. But the overall market is still doing well. I wonder if so e late in for has come out, though I can't find anything, or if profit taking has already begun. Of course, some manipulation ahead of the report is also possible.
I tend to see Apple move in ways, in the short term, opposite of what one might think. I don't pretend to know what the hell I'm talking about, though.
The report is probably going to be fantastic, then the price will drop as people do ... something.
I'm in it for the long haul, though. So little bumps and drops never really concern me that much, since it seems to go up and up, over the long run.
The market is up all around, about as much as Apple is, due to the news about housing. I expected Apple to be up more
Well we saw goog jump a lot on a little bit of good news and apple may just jump also.
Appl is up a bunch this last 9 days .
so we may see appl streaking up on great news past 400 !!!!
or sell down to 342 on great news ,
yea yea
take
,,,,,,take a
a walk on the wild side
and the colored girls go ... ,,, ,, , , ,
Um, maybe what? (I did cover some ground in that post.)
As I said, maybe. It's not always true, that is, what you were saying. I've seen it go both ways. You're correct, but not for each instance.
If Apple's earnings growth rate dropped to 25% annually, the multiples could also be expected to drop. Investors are already dramatically underpricing Apple's growth rates, so that hardly suggests that they'd start placing a premium on earnings growth if the rate actually declined. What we'd see more likely is a MSFT-like scenario, with multiples falling into the low teens and very dull performance. Value stock. We're already headed that way anyway.
in Apples' case, no doubt.
MSs' growth last year was about 8.5%. it's hardly comparable. Their net margins have also been going down over time.
Well we saw goog jump a lot on a little bit of good news and apple may just jump also.
Appl is up a bunch this last 9 days .
so we may see appl streaking up on great news past 400 !!!!
or sell down to 342 on great news ,
yea yea
take
,,,,,,take a
a walk on the wild side
and the colored girls go ... ,,, ,, , , ,
I'd love to know what you're on, Bruce.
As I said, maybe. It's not always true, that is, what you were saying. I've seen it go both ways. You're correct, but not for each instance.
As have I. It's a rule-of-thumb, not a law. But if I were a betting man, that's how I'd wager. We shall see for this quarter soon enough!
in Apples' case, no doubt.
MSs' growth last year was about 8.5%. it's hardly comparable. Their net margins have also been going down over time.
I'm not predicting that AAPL will become MSFT any time soon, but the trend is already in that direction and would only accelerate if Apple started posting earnings gains closer to 25%.
So how about that dividend?
Category Units ASP Revenue
Mac 4.05 1290\t 5228
iPod 8.5\t 175\t 1488
iPhone 18\t 650\t 11700
iPad 7.5\t 600\t 4500
iTunes\tNA\t NA\t 1850
Others\tNA\t NA\t \t1350
TOTAL: 26116
EPS $6.82
So how about that dividend?
I've been giving that some thought. With Apple spending on patents (twice), getting caught and having to pay for patents (Nokia), plus other large expenses, I think we're further away than ever.
They wouldn't even talk about it at the shareholders meeting. We'll have to see what the cash is this time. If they subtract these expenses then it won't be too much. Or it will simply come out of profits. I keep thinking that it will pull down the bottom line a bit, depending on how much they had to pay right now.
I've been giving that some thought. With Apple spending on patents (twice), getting caught and having to pay for patents (Nokia), plus other large expenses, I think we're further away than ever.
They wouldn't even talk about it at the shareholders meeting. We'll have to see what the cash is this time. If they subtract these expenses then it won't be too much. Or it will simply come out of profits. I keep thinking that it will pull down the bottom line a bit, depending on how much they had to pay right now.
I've never expected a dividend that can't easily be paid out of cash flow. I suspect the objection on the part of the board to paying even a modest dividend is more religious than practical. They always avoid answering that question at stockholder's meeting, so that's nothing new.
EPS $7.79. Can that be right?
Crazy man... crazy!! [on edit: 7.79 does sound high]
20.34 million iPhones! 9.25 million iPads!!
Yowzer!!
EPS $7.79. Can that be right?
"Sustaining that sort of momentum will require as massive blowout report, something like $7.00 or more..."
EPS $7.79. Can that be right?
The numbers are crazy. Missed a bit on Macs and iPods, but everything else is in orbit.
Hoping we'll see $400+ today!
After Hours: 403.06 +26.21 (6.96%)
The price as of a minute ago is:
$399.93