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Category: Stock Market and Apple
Date: 29 January 2020 Stock Price: $317.69 We take a look at the 1st quarter earnings report of their 2020 fiscal year of Apple, the maker of the iPad, Macbook and the iPhone. The group's earnings blew past Wall Street estimates but they sighted that the Corona Virus might have an impact on their 2nd quarter 2020 earnings.
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About Apple
Apple is one of the worlds biggest smart phone and related accessories makers with the group manufacturing the iPhone, iPad, Macbook (laptops for those that don't know), Apple Watch and other related products and services. The group is starting to focus more and more on their services offering such as cloud services for their device users and services such as iTunes.
Apple iPhone 11
Overview of Apple's 1st quarter 2020 earnings results
Numbers we are interested in: (for the quarter)
Apple sales by product type and category for the 4th quarter of 2019:
So in summary Apple iPhone sales surged, iPad sales declined significantly and Wearables, Home and Accessories saw massive increases in value of sales with it being up over 35% compared to a year ago
- Sales of Products $79.104 billion (up from $73.435 billion for the same quarter of the previous year)
- Sales of Products increased by 7.79% over the last 12 months
- Sales of Services $12.715 billion (up from $10.875 billion for the same quarter of the previous year)
- Sales of Services increased by 16.19% over the last 12 months
- Total cost of sales: $56.602 billion (up from $52.279 billion for the same quarter of the previous year)
- Total cost of sales increased by 8.26% over the last 12 months
- Some margin gains for Apple as Sales of Products and Services grew faster than total cost of sales
- Operating income: $25.569 (up from $23.346 billion for the same quarter of the previous year)
- Net income $22.236 billion (up from $19.965 billion for the same quarter of the previous year)
- Diluted earnings per share: $4.99 (up from $4.18 for the same quarter of the previous year)
- PE ratio of Apple: 15.9
- Dividend declared: $0.77
- Dividend yield: 0.9%
- Number of shares in issue: 4.454 billion (down from 4.773 billion for the same period of the previous year)
- Cash and cash equivalents: $39.771 billion
- Cash and cash equivalents per share: $8.92
- Cash and cash equivalents makes up 2.8% of Apple's market capital
- Cash and cash equivalents makes up 11.67% of Apple's total assets
- Accounts receivable, net: $20.970 billion
- Accounts receivable makes up 6.15% of Apple's total assets
- Inventories: $4.097 billion
- Inventories makes up 1.20% of Apple's total assets
- Total stockholders equity in Apple: $89.531 billion
- Stockholders equity per share in Apple: $20.10
- Apple is trading at 15.7 times its stockholders equity per share which is well outside the expected range of between 2 and 4 times that most firms tend to trade at
- Cash generated from operations (for the 1st quarter): $30.515 billion
- Cash generated from operations per share (for the first quarter): $6.85
Apple sales by product type and category for the 4th quarter of 2019:
- iPhone $55.957 billon (up 7.6% from $51.982 billion for the same quarter of the previous year)
- Mac: $7.160 billion (down -3.45% from $7.416 billion for the same quarter of the previous year)
- iPad: $5.977 billion (down -11.18 from $6.729 billion for the same quarter of the previous year)
- Wearables, Home and Accessories: $10.010 billion (up 35.6% from $7.380 billion for the same quarter of the previous year)
- Services: $12.715 billion (up 16.9% from $10.875 billion for the same quarter of the previous year)
So in summary Apple iPhone sales surged, iPad sales declined significantly and Wearables, Home and Accessories saw massive increases in value of sales with it being up over 35% compared to a year ago
Apple (NASDAQ:AAPL) management commentary on 1st quarter 2020 earnings and guidance
Cupertino, California — January 28, 2020 — Apple today announced financial results for its fiscal 2020 first quarter ended December 28, 2019. The Company posted quarterly revenue of $91.8 billion, an increase of 9 percent from the year-ago quarter and an all-time record, and quarterly earnings per diluted share of $4.99, up 19 percent, also an all-time record. International sales accounted for 61 percent of the quarter’s revenue.
“We are thrilled to report Apple’s highest quarterly revenue ever, fueled by strong demand for our iPhone 11 and iPhone 11 Pro models, and all-time records for Services and Wearables,” said Tim Cook, Apple’s CEO. “During the holiday quarter our active installed base of devices grew in each of our geographic segments and has now reached over 1.5 billion. We see this as a powerful testament to the satisfaction, engagement and loyalty of our customers — and a great driver of our growth across the board.”
“Our very strong business performance drove an all-time net income record of $22.2 billion and generated operating cash flow of $30.5 billion,” said Luca Maestri, Apple’s CFO. “We also returned nearly $25 billion to shareholders during the quarter, including $20 billion in share repurchases and $3.5 billion in dividends and equivalents, as we maintain our target of reaching a net cash neutral position over time.”
“We are thrilled to report Apple’s highest quarterly revenue ever, fueled by strong demand for our iPhone 11 and iPhone 11 Pro models, and all-time records for Services and Wearables,” said Tim Cook, Apple’s CEO. “During the holiday quarter our active installed base of devices grew in each of our geographic segments and has now reached over 1.5 billion. We see this as a powerful testament to the satisfaction, engagement and loyalty of our customers — and a great driver of our growth across the board.”
“Our very strong business performance drove an all-time net income record of $22.2 billion and generated operating cash flow of $30.5 billion,” said Luca Maestri, Apple’s CFO. “We also returned nearly $25 billion to shareholders during the quarter, including $20 billion in share repurchases and $3.5 billion in dividends and equivalents, as we maintain our target of reaching a net cash neutral position over time.”
Apple is providing the following guidance for its fiscal 2020 second quarter:
Apple’s board of directors has declared a cash dividend of $0.77 per share of the Company’s common stock. The dividend is payable on February 13, 2020 to shareholders of record as of the close of business on February 10, 2020
- revenue between $63.0 billion and $67.0 billion
- gross margin between 38.0 percent and 39.0 percent
- operating expenses between $9.6 billion and $9.7 billion
- other income/(expense) of $250 million
- tax rate of approximately 16.5 percent
Apple’s board of directors has declared a cash dividend of $0.77 per share of the Company’s common stock. The dividend is payable on February 13, 2020 to shareholders of record as of the close of business on February 10, 2020
Apple (NYSE:AAPL) stock price history
The image below obtained from Google, shows the stock price history of Apple (NASDAQ: APPL) for the last 5 years. And its been a very good time for Apple shareholders. 5 years ago the stock of Apple was trading at around $117 a stock and its currently trading at $317.69 a stock. That's a very healthy 171% return provided to Apple stockholders over the last 5 years.
The stock of Apple is trading at a lot closer to its 52 week high of $323.33 than it is to its 52 week low of $153.66 a stock, which to us is a clear indication that the short term sentiment and momentum of Apple stock is very positive at this point in time,
The stock of Apple is trading at a lot closer to its 52 week high of $323.33 than it is to its 52 week low of $153.66 a stock, which to us is a clear indication that the short term sentiment and momentum of Apple stock is very positive at this point in time,
Apple ( NASDAQ:AAPL) stock price history over the last 5 years
Recent coverage of Apple
The extract below discusses Apple's latest results as obtained from TheStreet.com
Apple Inc. (AAPL) - Get Report smashed first quarter earnings forecast Tuesday, thanks in part to robust demand for its new suite of iPhones, sending shares in the world's biggest tech company to a fresh all-time high in extended hours trading. Apple said earnings for the three months ending on December 28, the group's fiscal first quarter, were pegged at $4.99 per share, up 19.4% from last year and well ahead of the Street consensus forecast of $4.55 per share. Group revenues, Apple said, rose 9% from last year to $91.8 billion, again smashing the analyst consensus of an $88.4 billion tally.
Looking into the company's March quarter, Apple said it sees revenues in the range of $63 billion to $67 billion, firmly ahead of the Street consensus of $62.4 billion. “We are thrilled to report Apple’s highest quarterly revenue ever, fueled by strong demand for our iPhone 11 and iPhone 11 Pro models, and all-time records for Services and Wearables,” said CEO Tim Cook. “During the holiday quarter our active installed base of devices grew in each of our geographic segments and has now reached over 1.5 billion."
Read the full article here
Apple Inc. (AAPL) - Get Report smashed first quarter earnings forecast Tuesday, thanks in part to robust demand for its new suite of iPhones, sending shares in the world's biggest tech company to a fresh all-time high in extended hours trading. Apple said earnings for the three months ending on December 28, the group's fiscal first quarter, were pegged at $4.99 per share, up 19.4% from last year and well ahead of the Street consensus forecast of $4.55 per share. Group revenues, Apple said, rose 9% from last year to $91.8 billion, again smashing the analyst consensus of an $88.4 billion tally.
Looking into the company's March quarter, Apple said it sees revenues in the range of $63 billion to $67 billion, firmly ahead of the Street consensus of $62.4 billion. “We are thrilled to report Apple’s highest quarterly revenue ever, fueled by strong demand for our iPhone 11 and iPhone 11 Pro models, and all-time records for Services and Wearables,” said CEO Tim Cook. “During the holiday quarter our active installed base of devices grew in each of our geographic segments and has now reached over 1.5 billion."
Read the full article here
Apple iStore
Apple (NASDAQ:AAPLE) stock valuation
So what do we value Apple's stock at after the release of their 4th quarter 2019 earnings and their guidance provided for 2020. Based on their latest earnings report our valuation model provides a target (full value) price of Apple at $255.70 a stock (up significantly from our 4th quarter 2019 earnings report valuation of Apple). We therefore believe that the stock of Apple is overvalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $255.70. Therefore we believe a good entry point into Apple stock is at $230 or below. We expect the stock of Apple to pull back from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is significantly overvalued at this point in time.
Since the stock of Apple is trading at well above our target (full value) price and our suggested entry price we will go against most market commentators and rate Apple as a sell
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $255.70. Therefore we believe a good entry point into Apple stock is at $230 or below. We expect the stock of Apple to pull back from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is significantly overvalued at this point in time.
Since the stock of Apple is trading at well above our target (full value) price and our suggested entry price we will go against most market commentators and rate Apple as a sell
Next earnings release of Apple
It is expected that Apple will publish their Q2, 2020 earnings report in late April 2020