Tue Erns Watch: Apple, Google, Microsoft…

Equities 4 minutes to read
Kay Van-Petersen

Global Macro Strategist

Summary:  Earnings Watch aims to highlight some of the key names that are in heavy rotation on investors' & traders' radars. We check in on Apple, Microsoft & Google (Alphabet).


(These are solely the views & opinions of KVP, & do not constitute any trade or investment recommendations. By the time you synthesize this, things may have changed.)

Tue Erns Watch: Apple, Google, Microsoft

 

Overview


AAPL: $148.99 Last, $2.5T Mkt Cap, +12% YTD,  P/E 28x, 3Est. +$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

    Tue - AAPL

-

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

    Tue - GOOG 

-

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


    Tue - MSFT

-

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

This is the way

KVP

Disclaimer

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000
Australia

Contact Saxo

Select region

Australia
Australia

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide and Product Disclosure Statement to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.
Please click here to view our full disclaimer.