AAPL Hits All-Time High, AAPL Valuation Metrics, Observations on Big Tech Valuation
We begin today’s update with my thoughts on AAPL shares hitting all-time highs. The discussion will then turn to an examination of AAPL valuation metrics (forward P/E, EV/FCF, and free cash flow yield). In addition to looking at Apple’s valuation metrics, there is value found in taking a broader look at how Big Tech is trading from a valuation perspective. We will keep our focus to free cash flow / enterprise value. While there may not be one gold standard valuation metric that all market participants prioritize, free cash flow remains my go-to metric. The data removes much of the noise that is found with income statement line items.
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My 4Q23 Apple Estimates, Early Thoughts on Apple’s 1Q24, My Current Apple Earnings Model
Apple reports FY4Q23 earnings on Thursday. Today’s update contains the second half of Neil’s earnings preview. The first half is available here. The update begins with Neil’s granular financial estimates. The discussion includes qualitative explanations for estimates related to Apple’s product categories. We then look at Neil’s expectations for what Apple will say about guidance (FY1Q24). We conclude with Neil’s updated Apple earnings model and how the model has changed over the past three months. Access to Neil’s Apple earnings model is a benefit associated with Above Avalon membership at no additional cost.
Hello everyone. Welcome to November.
We will continue our Apple 4Q23 earnings preview with a look at my granular estimates. The update also includes a few thoughts on Apple’s FY1Q24 guidance and my updated earnings model.
In keeping with our usual practice, tomorrow’s update (Thursday) will be pushed back a day so that we have a special Friday edition of the update to review Apple’s earnings. Apple will release earnings Thursday at 4:30 pm ET.
My 4Q23 Apple Estimates
Here are my granular estimates for Apple’s 4Q23:
Revenue: $88.9B (consensus: $84.2B)
Overall gross margin: 44.9% (guidance: 44% to 45%)
Gross margin (HW): 36.7%
Gross margin (Services): 70.7%
An Above Avalon membership is required to continue reading this update. Members can read the full update here. An audio version of this update is available to members who have the podcast add-on attached to their membership. More information about the podcast add-on is found here.
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