I have no position in Apple. I respect what they have accomplished. Since the news broke that they increased production for their new product line, the stock has been in a relentless climb. So the consensus must be that there is HUGE demand for their new product line, their sales are going to the moon, the stock is going to the moon and, as a result, all must be well in lala-land. I personally hope the latter is true. But, if it is, it won't be because of Apple. Here is the reality.
The company just announced quarter 4 earnings (their 4th quarter ends on September 30th each year). They earned an astonishing $3.03 per share against consensus estimates of $2.83 per share. Revenue was $64.04 billion versus consensus of $62.86 billion. Wow, they killed it......or did they? EPS increased .04% YOY. Revenue increased 1.8% YOY. There is more in the bigger picture.
Fiscal 2018 EPS was $11.87 per share. And fiscal 2019 EPS ended where? That would be $11.85 per share. And this after boatloads of share buybacks that prop up earnings per share. Revenue for the year that ended September 30, 2018 was $265.595 billion. Revenue for the year that ended September 30, 2019 was........hold your breath now.......remember.......this is BULLISH......$260.174 billion. That's right. Revenues decreased year-over-year as did earnings per share AFTER buybacks.
The midpoint of their guidance for Quarter 1 (ends December 31, 2019 and annually is the strongest quarter) was $87.5 billion. Whoopee! The consensus was for revenue of $86.21 billion. All must be well. Wait. Pay attention here. Their quarter 1 revenue for the quarter that ended December 31, 2017 was $88.293 billion. So their forward guidance says.......In two years the company has gone NOWHERE! And for that we celebrate.
Oh, I almost forgot. There's another little tidbit. Their number ONE revenue item is iPhone revenue. That number for the quarter was $33.4 billion. Consensus was for iPhone revenue of $32.5 billion. Yippee again! Oh, wait. That number was DOWN 9% year-over-year. So, as it relates to their number one revenue item, they beat an estimate number that was terrible to begin with.
What a game! And the beat goes on.......and the beat goes on.......
And, in edit, I almost forgot. That stock run since the news broke that they had ramped up iPhone production has to mean there is huge demand. I keep thinking about this one little thing. So far, as it relates to tariffs, Apple has skated by pretty clean. They have been granted waivers and exemptions that have resulted in little interference with their numbers. But, the planned tariffs for December 15th, which have NOT been removed or delayed yet, will affect them. They have a ton of cash. What if they decided to invest some of that cash in themselves and "buy inventory forward" in order to minimize the effects of presumed tariffs? Just a thought.
Edited by Iblayz, 30 October 2019 - 05:51 PM.
