AAPL Estimates: Why The Bloggers Get It And The Pros Are Left Behind

  • Posted: 19 July 2011 03:38 AM #31

    DawnTreader - 19 July 2011 06:27 AM
    Mercel - 19 July 2011 05:46 AM

    Congrats to Robert for calling attention to not only of the relationship between net income as a % of sales (of which OPEX is a significant factor) but also the low sales figures used by WS. 

    A nit:  I might have sorted the table in ascending order as PED does with EPS #s (e.g. from more accurate to less)..  At first blush, it appeared the pros were coming out on top.  grin 

    WS price targets are generally better than their EPS estimates, because the latter lend themselves to more accountability than erroneous 12 month price targets that can be “covered” by revisions.  Price targets never see any accountability because the 12 month targets keep fading into the future, like a mirage.

    Thanks for the feedback. Those numbers were a weekend’s worth of work.

    And it shows.  I might mention that Excel 2011 for the Mac will save large, older files into smaller files (In anticipation of Lion, I’ve migrated from Excel 2004, a PowerPC app).

         
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    Posted: 19 July 2011 05:10 AM #32

    Red shirted ensign - 19 July 2011 03:55 AM
    adamthompson3232 - 19 July 2011 03:43 AM
    ChasMac77 - 19 July 2011 03:30 AM

    WS numbers would have been even further off if they hadn’t gotten an early peek at Unit numbers via PED IMO. Interesting how several of them made last minute changes.

    There is no “Liability” on their end. There’s enough disclaimers for anything that they say or do to fill the Taj Mahal.

    BTW, I still think that publishing AFB numbers doesn’t do the stock any favors. Just look at the whisper number (and yes, the stock has tanked post earning on “missing the whisper number”). Discussion for another day.

    I don’t think the whisper number matters one iota but there’s no way to prove it. Bottom line is that results and guidance drive the stock. AAPL’s guidance is always 25% lower than where actuals will be (+/- a tiny bit) and since the actual numbers are getting so large the delta between guidance and actuals in absolutely dollars is getting bigger and bigger. I am looking forward to some absolutely shocking actual numbers for the September quarter and December quarter. I am thinking $8.00+ easy for September and $12.00+ for the December. Call me
    crazy all you want but I think this is going to happen.

    A few weeks ago I would have thought you were drinking Nagrani’s Kool-aide…...but now I am right with you. Deagol is well over 8 bucks in his outlook for September. And what is really scary is that things don’t have to break just right for your numbers to come true, they just don’t have to break terribly wrong!

    AT, $8+ EPS for fiscal Q4 is almost too easy, IF iPhone 5 can ramp up and make a contribution.  I ran a quick delta analysis (comparing a fictional Q4 against actual Q2) and got to $31B/$8.20 EPS as a prelim discussion point without trying very hard.  Which is also quite close to deagol’s Q3 numbers - though I won’t be running my numbers through my home game worksheets for a while yet.  Of course, my prelim napkin math doesn’t have an iota of the thought behind deagol’s estimates.

    Moving to the present (Q3), in a way, all we really need is for the revenue side to “cooperate” and we’ll get some great numbers for this quarter.  Quite a few of us have an estimated net income ratio at around .238, which is really pretty conservative if you think about it.

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
  • Posted: 19 July 2011 01:20 PM #33

    Mav - 19 July 2011 08:10 AM

    Moving to the present (Q3), in a way, all we really need is for the revenue side to “cooperate” and we’ll get some great numbers for this quarter.  Quite a few of us have an estimated net income ratio at around .238, which is really pretty conservative if you think about it.

    I like the net income ratio I’ve now popularized. net income ratio I’ve now popularizedgrin

    Revenue growth is key raising that ratio. I’ve said before, provided supply is available, I expect 30 million iPhones (all models combined) to be sold within 90 days of the iPhone 5’s release. Supply is the only variable about which I have a concern.

         
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    Posted: 19 July 2011 03:45 PM #34

    “Big props” for popularizing it, DT.  We shouldn’t be the only people in the room using this very simple metric.  If nothing else, it shows how much more in tune we are than everyone else.

    Signature

    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
  • Posted: 19 July 2011 03:48 PM #35

    Mav - 19 July 2011 06:45 PM

    “Big props” for popularizing it, DT.  We shouldn’t be the only people in the room using this very simple metric.  If nothing else, it shows how much more in tune we are than everyone else.

    I’m going to use it more often. I developed a series of metrics to validate the estimates of the AFB group. The metrics can be applied more broadly and I’m thinking now I can use some of the metrics for comparisons among companies.

    The validation tools worked well in finding numbers to be corrected in the AFB’s quarterly estimate index.

         
  • Posted: 19 July 2011 03:51 PM #36

    ChasMac77 - 19 July 2011 03:30 AM

    BTW, I still think that publishing AFB numbers doesn’t do the stock any favors. Just look at the whisper number (and yes, the stock has tanked post earning on “missing the whisper number”). Discussion for another day.

    +1.

         
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    Posted: 19 July 2011 04:02 PM #37

    Maybe, but what’re ya gonna do?  Publish the estimates today?

    Even if you get all of AFB to agree to it, the amateur pros like Zaky, Muller, Dediu, Tello et al. will not.

    Fact is, the estimates are more accurate, people will be better informed about the growth story, and AAPL’s lookin’ cheap.

    Signature

    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
  • Posted: 19 July 2011 04:08 PM #38

    Mav - 19 July 2011 07:02 PM

    Maybe, but what’re ya gonna do?  Publish the estimates today?

    Even if you get all of AFB to agree to it, the amateur pros like Zaky, Muller, Dediu, Tello et al. will not.

    Fact is, the estimates are more accurate, people will be better informed about the growth story, and AAPL’s lookin’ cheap.

    Do it behind a paywall or restricted blog.  The whisper #s are raising the bar (and risk that AAPL sells off).

         
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    Posted: 19 July 2011 04:11 PM #39

    You could say that, but really now, raising expectations on a stock trading at a soon-to-be P/E of 15.6 or so?  The market’s not that stupid, and buyers will flock in droves if there’s a selloff.  You can manipulate AAPL all you want but the market just will not allow it to sink to RIMM or DELL valuations (OK, you know what - RIMM’s a bad example. :D). 

    Call it Stockholm Syndrome but it’s pretty safe down here in the cellar.  Not much farther down to go!

    Signature

    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
  • Posted: 19 July 2011 04:13 PM #40

    Mav - 19 July 2011 07:11 PM

    Call it Stockholm Syndrome but it’s pretty safe down here in the cellar.  Not much farther down to go!

    Short term memory there Mav.  We were trolling at $310 a few weeks ago…

         
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    Posted: 19 July 2011 04:13 PM #41

    Mav - 19 July 2011 07:02 PM

    Maybe, but what’re ya gonna do?  Publish the estimates today?

    Even if you get all of AFB to agree to it, the amateur pros like Zaky, Muller, Dediu, Tello et al. will not.

    Fact is, the estimates are more accurate, people will be better informed about the growth story, and AAPL’s lookin’ cheap.

    Yes, publish the numbers today. That would be a start. Put them in a hermetically sealed envelope dated July1 (nod to Johnny Carson). And yes, the amateur pros are still going to post their numbers, agreed. The earlier AFB posts and the later WS posts, the less chance you have of illustrating what fools they are. (you don’t think they’re looking in?) Isn’t that half the point of the exercise? So where does the whisper number come from? Certainly not from WS…

    I still wish more focus would be on FY12 EPS estimates. That’s where they’re really off and is the 2nd most often quoted number in articles. (FPE).

    Edit: agree with Mercel 100%

    [ Edited: 19 July 2011 04:23 PM by ChasMac77 ]      
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    Posted: 19 July 2011 04:17 PM #42

    Mercel - 19 July 2011 07:13 PM
    Mav - 19 July 2011 07:11 PM

    Call it Stockholm Syndrome but it’s pretty safe down here in the cellar.  Not much farther down to go!

    Short term memory there Mav.  We were trolling at $310 a few weeks ago…

    One snap and clear!

    Mercel, the P/E then was about 15.  FUD levels were at all-time highs.  The market pushed back with a vengeance.

    Our new P/E at today’s price is 15.6.  Imma take another run at the football, lousy placeholder aside, and say that P/E compression will not instanteously crush us to a P/E of 14ish.

    Signature

    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
  • Posted: 19 July 2011 04:20 PM #43

    Mav - 19 July 2011 07:17 PM

    Our new P/E at today’s price is 15.6.  Imma take another run at the football, lousy placeholder aside, and say that P/E compression will not instanteously crush us to a P/E of 14ish.

    There’s no instant replay after earnings, so I hope you’re right (and I think you are).

         
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    Posted: 19 July 2011 04:22 PM #44

    ChasMac77 - 19 July 2011 07:13 PM
    Mav - 19 July 2011 07:02 PM

    Maybe, but what’re ya gonna do?  Publish the estimates today?

    Even if you get all of AFB to agree to it, the amateur pros like Zaky, Muller, Dediu, Tello et al. will not.

    Fact is, the estimates are more accurate, people will be better informed about the growth story, and AAPL’s lookin’ cheap.

    Yes, publish the numbers today. That would be a start. Put them in a hermetically sealed enveloped dated July1 (nod to Johnny Carson). And yes, the amateur pros are still going to post their numbers, agreed. The earlier AFB posts and the later WS posts, the less chance you have of illustrating what fools they are. (you don’t think they’re looking in?) Isn’t that half the point of the exercise? So where does the whisper number come from? Certainly not from WS…

    I still wish more focus would be on FY12 EPS estimates. That’s where they’re really off and is the 2nd most often quoted number in articles. (FPE).

    I wouldn’t mind that Chas, the problem is having enough people agree to it.  For the big guns, there’s actual financial opportunity to be had in sharing their knowledge.  Can’t blame ‘em if they wouldn’t go along with it.

    Also, there’s long been enough data points now that in truth, people can make up their own numbers.  Just use AT’s approach (add a little of this to revs guidance and a little of that to earnings guidance).  It’s not rocket science.

    At the end of the day, it might be better for AFB and the other unaffiliateds to put up their numbers, which are grounded in reason, than for WS and gang to make up their own nonsense in an information vacuum.

    Signature

    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
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    Posted: 19 July 2011 04:29 PM #45

    Mav, well there’s enough group think here going on anyway so it’s all a moot point. We “get” the simple formulas that let us get into the right zip code. When I start hearing idiots like Cramer saying that $7.00 is the line in the sand then I get a little worried.

    Best of luck