{"id":8950,"date":"2019-04-30T16:05:27","date_gmt":"2019-04-30T16:05:27","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=8950"},"modified":"2019-05-05T12:32:10","modified_gmt":"2019-05-05T12:32:10","slug":"apple-reports-tonight-stock-rangebound-as-business-model-transition-evolves","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=8950","title":{"rendered":"Apple Reports Tonight: Stock Rangebound as Business Model Transition Evolves?"},"content":{"rendered":"
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click to enlarge<\/figcaption><\/figure>\n

This weekly chart of Apple shows that – while the stock has had a nice bounce since the December ’18 lows, it remains well below its all-time-high from the 3rd quarter of 2018 near $230.<\/p>\n

Here is the trend in Apple’s forward EPS consensus<\/strong><\/em> (source: IBES by Refinitiv)<\/p>\n

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click to enhance<\/figcaption><\/figure>\n

 <\/p>\n

The highlighted, blocked area shows Apple’s forward EPS estimates speaking with the October ’18 quarter last year and steadily declining from there.<\/p>\n

Here is the trend in Apple’s forward revenue estimates:<\/strong><\/em> (Source: IBES by Refinitiv)<\/p>\n

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click to enhance<\/figcaption><\/figure>\n

 <\/p>\n

Summary \/ Conclusion:<\/strong><\/em>\u00a0consensus Street estimates are looking for $57.4 billion in revenue after the bell tonight for Apple’s fiscal Q2 ’19, generating $2.36 in EPS for year-over-year declines in revenue of 6% and 14% respectively.<\/p>\n

Here is what isn’t shown: Apple’s “average” revenue and EPS growth as it’s currently being forecast through fiscal 2021 is 7% and 2% respectively, which obviously changes month-to-month and quarter-to-quarter, but the Street is expecting continued iPhone revenue and margin pressure, as the business model remains in transition from a Technology Hardware company to a “services” model.<\/p>\n

The “next transition” that the iPhone has always hung on during 2013 and then 2015 – 2016 seems less in evidence today as the price of an iPhone keeps people using their older model (as I do).<\/p>\n

In the December ’18 quarter, IPhone revenue fell 15% as “non-iPhone” revenues grew 19% y\/y, but gross margin fell 400 basis points as the iPhone unit sales fell sharply.<\/p>\n

The year-over-year decline in revenue and EPS is worse today than after the first quarter’s results were posted so analyst revisions continue to be negative.<\/p>\n

My biggest issue around Apple is that the stock could remain rangebound for years. The Apple streaming services day held a few weeks ago seemed to get a lukewarm response from the Street, as pricing of the service wasn’t clear.<\/p>\n

Apple’s stock is up 30% YTD versus the 16% – 17% for the SP 500 so since the market bottom in late December ’18, the stock has dramatically outperformed.<\/p>\n

Client’s saw most of their Apple sold between $160 – $170 last May ’18 after a little fundamental homework made me worried<\/a> about what was happening with Apple’s cash-flow.<\/p>\n

The cash-flow-to-net-income ratio is still on a downward track. It will be updated after the call.<\/p>\n

Thanks for reading.<\/p>\n

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 <\/p>\n","protected":false},"excerpt":{"rendered":"

This weekly chart of Apple shows that – while the stock has had a nice bounce since the December ’18…<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[90],"tags":[],"class_list":["post-8950","post","type-post","status-publish","format-standard","hentry","category-apple-aapl"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/8950","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8950"}],"version-history":[{"count":7,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/8950\/revisions"}],"predecessor-version":[{"id":8969,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/8950\/revisions\/8969"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8950"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8950"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8950"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}