Tue Erns Watch: Apple, Google, Microsoft…

Tue Erns Watch: Apple, Google, Microsoft

Overview

AAPL: $148.99 Last, $2.5T Mkt Cap, +12% YTD,  P/E 28x, 3Q Est. +$1.01 EPS, Rev $73.8B

• The one & only Apple, the largest market cap of any publicly listed company at $2.5T, that is more than 10% the size of the c. $22T US economy. The last quarter's financials saw Apple sitting on +$205B of cash & equivalents on its balance sheet, about a third of Tesla's $630B mkt cap.  
  
  
• The 12m consensus price target is c. $158 in-line with the current $148 share price, with a range of  $185 to $115. Analysts have a c. 76% buys in the name, vs. 7% sells with the balance being holds at 17%.
  
  
• The name is up c. +12% YTD and trades at a fwd P/E of 28x. Its got a tini-tiny dividend yield of 0.60% -
  
  
• One thing that KVP has yet to understand, is why we don’t see even more activist corporate raiders in tech, i.e. they are sitting on so much cash, generate tons of cashflows, they can service a lot of debt - & debt has never been cheaper & is only going to get cheaper.  Perhaps Carl Icahn need to give Tim Cook another call to up that divi? At $2.5T mkt cap how fast can you keep growing & innovating?
  
  
• 1yr earning growth are expected to be +3% for 2022 (+58% for 2021). For 3Q Erns, est. +$1.01 EPS +57%, Rev $73.8B +24%
  
  
• Link to previous quarterly results. (note, apple’s quarterlies are not fiscal calendar)
  
  
• Apple [AAPL] results should be out after the US markets close today

  

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GOOG: $2792.89 Last, $1.8T Mkt Cap, +59% YTD,  P/E 29, 2Q Est. $22.11 EPS, Rev $46B

• Yes, yes… technically Alphabet… yet the majority of the time that confuses people, as you get a “you mean google!”. So Google just knocking on the $2T club, as it weighs in at $1.8T.
  
  
• For context that c. 70% of UK or 120% of AU 2020 GDP, or over 5x the GDP of Denmark.  
  
  
• The 12m consensus price target is c. $2,747 which is in-line with the current $1522 share price. There is a tight skew to the downside at +4% to -10%, on the 2900 to 2510 forecast range. 
  
  
• Similar to a year ago, analysts only have buys as a rating (100%) in the name.
  
  
• The name is up c. +59% YTD & is similar to a lot of the other big tech names & major equity US indices is making ATH
  
  
• 1yr erns growth are expected to be +11% for 2022. For 2Q Erns, est. +$22.11 EPS +112%, Rev $46B +46%
  
  
• Link to previous quarterly results & transcripts.
  
  
• Google/Alphabet's [GOOG] results should be out after the US markets close today
  
   

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MSFT: $289 Last, $2.2T Mkt Cap, +30% YTD,  P/E 35, 4Q Est. $1.92 EPS, Rev $44.3B

• Who would have thought that after years of Bill Gates topping the Billionaire Charts as Numero Uno, today finds him at the #4 slot yet with an ATH of wealth of $151B. The 3-2-1 top slots go to Bernaud Arnault $175B, Elon Musk $180B, Jeff Bezos $212B.
  
  

• Microsoft is one of the few companies that can boast being part of the +$2 trillion dollar club (Along with Apple) & at a fwd P/E of 35x could be considered pricey. Yet as per a quip from our equity strategist, the name was also expensive back in the 80s... so this could be an example of company where you get what you pay for.  
  
  

• The pandemic has been a massive catalyst for accelerating digitization & remote work, of which name like MSFT have been huge beneficiaries. 
  
  
• Boring = Profitable. Sexy = Competition.
  
  
• Whilst never spoken in the same emotional tones of something sexy like a Tesla or Netflix or Shopify... MSFT is like the quiet professional that shows up day in & day out & executes.
  
  
• In addition to being up for nine years straight (8 of which in double digits), including the last two years that saw +58% in 2019 & +43% in 2020. The name is up +30% YTD. 
  
  
• The 12m consensus price target is c. $305 in-line with the current $289 share price, with a range that skewed to the upside for a +31% to -7% forecast of $378 to $270. Analysts have a c. 91% buys in the name, vs. 0% sells with the balance being holds at 9%.
  
  
• The company was last sitting on about $60bn in C&E, with about $23bn in FCF generation.
  
  
• 1yr erns growth are expected to be +35% for 2021 (+21% for 2020). For 2Q earnings, Est. $1.91 EPS +32% QoQ, Rev $44.3B +16% QoQ
  
  
• Link to previous quarterly results on 27 Apr 21.
  
  
• Microsoft [MSFT] results should be out after the US markets close today
  
  
  

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Start-to-End = Gratitude + Integrity + Vision + Tenacity. Process > Outcome. Sizing > Idea.

This is the way

KVP