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AAPL, slow sales but a 26% higher target price
Current 153 Target 192 (+26%)
October 29th, 2021
1 minute read
Sales up only 2%
Costs higher
1 minute read
Sales up only 2%
- Sales grew by only 2% in the third quarter to 83,360 million dollars which is below our forecast 87,949 million dollars, perhaps ahead of iPhone 13 launch.
- This brings the quarterly average growth to 11%
- We predict average growth of 5% in this next 12 months to bring sales to 94,051 million dollars in the third quarter of 2022.
Costs higher
- The cash cost ratio was higher at -74% in the third quarter & net profit declined to 20,551 million dollars
- The average quarterly cost ratio is now at -70%
- We use slightly higher -71% cost ratio to predict a 26,740 million dollar profit in the third quarter of 2021.
Cashflow lower on working capital but expected higher
Balance sheet, still higher leverage
Valuation, a 26% higher target price
- Free cashflow was lower at 16,977 million dollars in the third quarter as investment spending increased to -3,223 million dollars plus some negative working capital.
- Average quarterly Cashflow is now at 23,238 million dollars
- We assume the same -3,223 million dollars investment spending which with higher sales gives a 24,956 million dollars Cashflow in the third quarter of 2021.
Balance sheet, still higher leverage
- Cash increased from 34,050 to 34,940 million dollars in the third quarter.
- Liabilities increased from 265,560 to 287,912 million dollars so net cash worsened from -231,510 to -252,972 million dollars.
- With our forecast cashflow & a -95,818 million dollars equity payout net cash will be -249,462 million dollars in 12 months time.
Valuation, a 26% higher target price
- AAPL capital from the last six years increased to 404,436 million dollars in the third quarter & will rise to 503,764 million dollars in the next 12 months.
- At the current market value of 2,522,000 million dollars based on our forecasts it’s at 7X assets with a 3.0 years payback & a 4% yield.
- Our cashflow forecast is 99,328 million dollars which means a 25X valuation. At a 32X valuation gives a 26% higher target price of 192 dollars.
