AAPL: The Coiled Spring

  • Posted: 27 June 2011 03:09 AM

    AAPL: The Coiled Spring

    For this article I asked the AFB’s Jeff Fosberg (Mercel) to update his popular coiled spring graphic to reflect Friday’s closing prices.

    Snippet: Apple is currently trading at its lowest price-earnings multiple since the elimination of deferred revenue accounting on the iPhone and is currently valued at only 72.5% of the Wall Street analyst median price target of $450 per share. At Friday’s closing price Apple is trading at 11.87 times my estimated FY2011 eps of $27.50 and 8.16 times my forecast FY2012 eps of $40 per share.

         
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    Posted: 27 June 2011 03:54 AM #1

    Here’s a factoid.  Leave off FY 2010 Q4.  Use Q 1,2 and 3.  Total EPS is 19.3 or more, according to AFB estimates.  Currently AAPL PE is less than 17, using 3/4 of the year.  It is easy to see that AAPL is 20 % undervalued with this compressed P/E.

         
  • Posted: 27 June 2011 11:59 AM #2

    Excellent work, as always.

         
  • Posted: 27 June 2011 11:10 PM #3

    FalKirk - 27 June 2011 02:59 PM

    Excellent work, as always.

    Thank you. I’m keeping to my price target. The iPhone 5 will sell on a scale that has not been seen before.

         
  • Posted: 28 June 2011 11:31 AM #4

    DawnTreader - 27 June 2011 06:09 AM

    AAPL: The Coiled Spring

    For this article I asked the AFB’s Jeff Fosberg (Mercel) to update his popular coiled spring graphic to reflect Friday’s closing prices.

    Snippet: Apple is currently trading at its lowest price-earnings multiple since the elimination of deferred revenue accounting on the iPhone and is currently valued at only 72.5% of the Wall Street analyst median price target of $450 per share. At Friday’s closing price Apple is trading at 11.87 times my estimated FY2011 eps of $27.50 and 8.16 times my forecast FY2012 eps of $40 per share.

    I’ll be continuing on this concept this weekend using another metric to demonstrate Apple’s oversold condition. In addition to the company’s low valuation, the June quarter outcome may be a very strong catalyst for share price appreciation.

    Remember, last year’s June quarter iPhone numbers are a soft compare.

         
  • Posted: 05 July 2011 01:23 PM #5

    Just over a week later AAPL is trading $22 higher. We called it.  grin

         
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    Posted: 05 July 2011 01:32 PM #6

    DawnTreader - 05 July 2011 04:23 PM

    Just over a week later AAPL is trading $22 higher. We called it.  grin

    Lets not get carried away.  We also went from 325 to 354 in March and then from 320 to 355 in April.

    This coiled spring is only considered sprung, when we get over 400 and stay there.  Until then it is just a bouncing ball. :-o

         
  • Posted: 05 July 2011 01:44 PM #7

    omacvi - 05 July 2011 04:32 PM

    This coiled spring is only considered sprung, when we get over 400 and stay there.  Until then it is just a bouncing ball. :-o

    OK, give your recent gains away. I’m sure there will be plenty of takers.

         
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    Posted: 06 July 2011 04:09 AM #8

    omacvi - 05 July 2011 04:32 PM
    DawnTreader - 05 July 2011 04:23 PM

    Just over a week later AAPL is trading $22 higher. We called it.  grin

    Lets not get carried away.  We also went from 325 to 354 in March and then from 320 to 355 in April.

    This coiled spring is only considered sprung, when we get over 400 and stay there.  Until then it is just a bouncing ball. :-o

    omacvi,

    $310 is the bottom.  Coiled spring is sprung.  For late bloomers, would consider above $364.90 as the confirmation, why choose $400?  Shouldn’t $400 is another psychological barrier?

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  • Posted: 06 July 2011 08:03 AM #9

    Mace - 06 July 2011 07:09 AM
    omacvi - 05 July 2011 04:32 PM
    DawnTreader - 05 July 2011 04:23 PM

    Just over a week later AAPL is trading $22 higher. We called it.  grin

    Lets not get carried away.  We also went from 325 to 354 in March and then from 320 to 355 in April.

    This coiled spring is only considered sprung, when we get over 400 and stay there.  Until then it is just a bouncing ball. :-o

    omacvi,

    $310 is the bottom.  Coiled spring is sprung.  For late bloomers, would consider above $364.90 as the confirmation, why choose $400?  Shouldn’t $400 is another psychological barrier?

    My price target is $590 per share. $400 will come and go fairly quickly.

         
  • Posted: 06 July 2011 09:54 AM #10

    DawnTreader - 06 July 2011 11:03 AM


    My price target is $590 per share. $400 will come and go fairly quickly.

    Is that a hope or a reasonable expectation?

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    Posted: 06 July 2011 10:05 AM #11

    westech - 06 July 2011 12:54 PM
    DawnTreader - 06 July 2011 11:03 AM


    My price target is $590 per share. $400 will come and go fairly quickly.

    Is that a hope or a reasonable expectation?


    The trailing 12m EPS and growth rate support $400 but the macro economy has too many unknowns IMO.  I agree with Robert that $400 will come and go fairly quickly assuming some macro improvements.  As long as congress screws around with the US debt ceiling and the Greece debacle continues, folk will be hesitant to award Apple a higher multiple despite their continued superior performance.

         
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    Posted: 06 July 2011 10:31 AM #12

    westech - 06 July 2011 12:54 PM

    Is that a hope or a reasonable expectation?

    Neither. But it’s going to be a chapter in my book.

         
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    Posted: 06 July 2011 10:46 AM #13

    Bosco (Brad Hutchings) - 06 July 2011 01:31 PM
    westech - 06 July 2011 12:54 PM

    Is that a hope or a reasonable expectation?

    Neither. But it’s going to be a chapter in my book.

    Are you saying the PE is going to stay low, and/or EPS is going to be low ?  You didn’t participate in the AFB EPS Estimates.    Right now, I’m only seeing vapor.

         
  • Posted: 06 July 2011 01:39 PM #14

    Bosco (Brad Hutchings) - 06 July 2011 01:31 PM
    westech - 06 July 2011 12:54 PM

    Is that a hope or a reasonable expectation?

    Neither. But it’s going to be a chapter in my book.

    You’re right. It’s neither a hope nor an expectation. It’s a forthcoming reality.

         
  • Posted: 06 July 2011 01:44 PM #15

    pats - 06 July 2011 01:05 PM
    westech - 06 July 2011 12:54 PM
    DawnTreader - 06 July 2011 11:03 AM


    My price target is $590 per share. $400 will come and go fairly quickly.

    Is that a hope or a reasonable expectation?


    The trailing 12m EPS and growth rate support $400 but the macro economy has too many unknowns IMO.  I agree with Robert that $400 will come and go fairly quickly assuming some macro improvements.  As long as congress screws around with the US debt ceiling and the Greece debacle continues, folk will be hesitant to award Apple a higher multiple despite their continued superior performance.

    Apple will exaggerate the overall market’s moves (up or down). I do expect a major bull move higher over the next 12 months as the debt ceiling issues are resolved, corporate profits improve and consumer spending slowly recovers.

    One of the fastest ways to remedy the unfunded public pension liability problems across the country is a rising stock market.