When I had laid it on the floor
I went to blow the fire a-flame,
But something rustled on the floor,
And some one called me by my name:
It had become a glimmering girl
With apple blossom in her hair
Who called me by my name and ran
And faded through the brightening air.
-- "The Song of Wandering Aengus," William Butler Yeats
Consumer electronics and music downloads have helped Apple
What analysts say:
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Buy, sell, or waffle? Twenty-seven Wall Street firms follow the big Mac, with 24 "buy" votes and three "holds." In our Motley Fool CAPS community, it carries a somewhat less enthusiastic three-star rating, based on input from nearly 6,000 investors like you and me.
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Revenues. Last year, Apple pulled in $4.36 billion in net revenues. This time, management expects $4.8 billion to $4.9 billion when it reports on Wednesday, while the Street has settled on a $5.2 billion figure.
- Earnings. The consensus forecast says $0.64 per share, though company guidance sits lower than that, at $0.60 per share. Either way, it's a serious boost from the $0.47 per share produced a year ago.
What management says:
"We've just kicked off what is going to be a very strong new product year for Apple by launching Apple TV and the revolutionary iPhone," said CEO Steve Jobs in the latest earnings report, assigning heavy weight to the success or failure of those devices in the marketplace by dint of the prominent mention.
We'll see about the iPhone soon enough, and the Apple TV is up and running to mixed reviews. Me, I'm more pleased to see that the house that Jobs built is back on track with its financial reporting and restatements.
What management does:
Cash flows are unpredictable in this neck of the woods, but all the GAAP results are marching onward and upward at a steady pace. The heady growth rush that started in the early days of the iPod and continued with Intel-based
|
9/2005 |
12/2005 |
4/2006 |
7/2006 |
9/2006 |
12/2006 |
|
|---|---|---|---|---|---|---|
|
Gross |
29.0% |
28.5% |
28.6% |
28.9% |
29.1% |
30.3% |
|
Operating |
12.1% |
12.8% |
12.7% |
13.2% |
13.5% |
15.4% |
|
Net |
9.5% |
9.9% |
10.0% |
10.3% |
10.3% |
11.7% |
|
FCF/Revenue |
16.3% |
10.9% |
5.5% |
7.2% |
8.1% |
14.7% |
|
YOY Growth |
9/2005 |
12/2005 |
4/2006 |
7/2006 |
9/2006 |
12/2006 |
|---|---|---|---|---|---|---|
|
Revenue |
68.3% |
65.8% |
56.0% |
44.1% |
38.6% |
27.7% |
|
Earnings |
399.2% |
214.6% |
129.4% |
88.3% |
49.8% |
51.9% |
One Fool says:
My bet is on the latter. It will take some time for iPhone sales to move the needle very much, given the massive $20.7 billion Apple shows in trailing revenues. Even an unqualified home run can't have the impact of a young iPod anymore.
It may be hard to come up with a repeat performance for a share price that rose more than 80% in the second half of 2005, and better than 70% over the last six months of 2006. Other than the iPhone and a WiFi-enabled iPod refresh, there doesn't seem to be much up Steve's sleeve right now.
Then again, the man has a knack for surprises. Even at a conservative 20% growth rate for the next five years, Apple stock appears affordable now, for the first time in forever. Do your own math with the Inside Value discounted cash flow calculator to see what I mean (it's free for 30 days). And on a quick price-to-free cash flow basis, the gadget giant works out to a ratio of 27, well below the mid-30s of rivals Microsoft
Intel and Microsoft are two of the recommendations of our Motley Fool Inside Value newsletter service. Sign up for a free 30-day trial to gain access to that handy valuation tool, and to read up on the market's miscalculations on these twin Brobdingnagians.
Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure will help you find the road ahead.
