Apple (NASDAQ:AAPL) blew out every single forecast last night, even the most bullish one, in terms of top line, margins and of course EPS. Earnings actually more than doubled and EPS at USD 13.87, +32% gap from consensus of USD 10.5. Price reaction following results in late section: +8% to +10%.
After a small miss in iPhones sales last quarter, Apple offset it with 37 million iPhones sold during Christmas time, consensus was 30 million, even though we had an extra week during this quarter, the figure remains impressive, with more than 100% growth over the same time last year.
iPad sales also came above consensus: 15.4 million units, exceeding consensus of 13.9 million and also growing over 100% from last year.
The iPhone and iPad business have worked so well that according to this quarter publication both represents already 73% of Apple's total sales, and possibly more in terms of profits (but the company does not disclose profits by products).
Guidance for the next quarter is above current consensus, EPS should be USD 8.50 vs consensus of USD 7.95. Wall Street consensus for the FY 2012 should be revised strongly up, from currently USD 35 to around USD 40 or plus. Finally, cash generation is strong as ever, USD 17 bln this quarter and cash and investments in balance sheet reached USD 97 bln this quarter, 25% of total Apple's market value. However, the company mentioned that no dividend for now, but they are opened to all possibilities to do with this cash going forward.
Some math: Apple's PE ratio following the Q1 2012 results should be 10x, one of the lowest in the IT-sector that averages 12.6x. PE ratio ex cash = 7.5x, ouch !!! Market capitalization when Apple will trade this section will near USD 400 bln, comparable to Exxon's USD 417 bln as of the close of yesterday. EPS growth rate for 2012 should be near 50% after all brokers revise their numbers, so PEG ratio might be around 0.2x or 0.15x times ex cash.
Despite the blowing numbers, the main question still is: Why the stock is up "only" 6%, with such low multiples and low risk ?
I have 2 pillars of answers that I heard firsthand from fund managers and analysts today:
1 The company got to big to continue to grow at this pace and would need a massive product launch in order to maintain it; and
2 Most fund managers have already a maximum weight on Apple and it is difficult to add positions at this point, the company should urgently start to pay some dividend in order to attract new asset class investors and support stock price increases from here. But as long as they have enough growth to satisfy investors I think they will keep the "dividend wild card" for a weaker quarter publication.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.