(Cut n paste of my comment from PED’s blog on CNN)

The Q4 2011 “miss” made me look long and hard at where I, the analysts, and the bloggers went wrong.

It all comes down to a single data point – listen to Peter Oppenheimer! Always! He telegraphed in no uncertain terms that they would come in light, guiding $5.50.

For this Q just in he did the same – he was shouting it out loud and clear that it would be a monumental quarter, guiding at $9.30.

Looking at (thanks PED!) the historical (back to mid 2006) beat over guidance, we get a range of 19 to 61%. At guidance of $9.30, and using the lowest beat of 19%, we get $11.07, a full dollar over Street consensus. Using the upper third, or a 50% beat, we get almost exactly the actual result of $13.87. And FYI, that “miss” was still a 28% beat of their own guidance.

The analyst who predicted that Apple would miss their *own* guidance should be fired on the spot.

This range is golden, and Oppy’s guidance is everything. The only fiddling that we, the investing public, need do is to gauge whether it was a good or great quarter and accordingly adjust where on the 19 to 61% range we should be sliding the needle.

So, heads up for next Q. At guidance of $8.50 we arrive at an EPS range of $10.11 to $13.69. Don’t let anybody say we weren’t all warned in advance!

Can’t sleep, will jot down some notes. Apologies for being unorganised. I’m sure you can all follow.

Recent low $310.50, recent high $378.65. EPS at time $20.98. Thus low PE of 14.8 to high PE of 18.05

Approx price in AH, $400 with new EPS $25.26 = PE of 15.35. Thus recent run from the lows of $310 until ER AH solely to maintain the PE range. Remove the last 2 weeks and extreme lows as outliers. Take highest price after Apr ER, $355 = 16.92 PE. So we are left with a PE range of 15 to 16.9.

Let’s assume that range is a trading range, gives us $379 to $427. There you go, trading range until end of summer.

Below is copy/paste of a comment made on PED’s blog.

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I like your DD. Here’s some of mine. AAPL is never going to regain a PE of 20, IMHO. Growth of 80% or 120% won’t change that. Sheer market cap is messing with too many people’s heads, and the closer it inches to becoming the largest publicly traded company in the world, the more the PE will compress down towards other mega cap company averages. This is because the vast majority of people in the market do not believe 50-120% growth is sustainable. They are wrong IMNHO, but they have more money than you and I do.

Eventually the PE will compress to the point that EPS growth will be reflected in PPS growth on a 1:1 basis.

The good news is that I believe we’re are at this point right now … for now. Thus the huge run from 320ish (or 15ish PE) to here, once again 15ish PE. All gains from now until next ER will be based on expected future EPS growth, not PE expansion. When (not if) AAPL overtakes XOM, I expect to see the PE compress further.

Maybe I’m stupid but I can’t find any way to send personal messages. As the most read forum, I’ll post this here.

Is it ok for me to link to threads here in my tweets? I’m finding I need to say the same things over and over on Twitter, so it might be easier to provide these people with a link to a post that I write here instead.

Weekly closing prices for AAPL, last 4 weeks.

$326.xx
$336.xx
$346.xx
$356.xx

If only we could find some kind of pattern to it all …

Have a good weekend, everybody.

All PEs mentioned here are TTM PEs.

I posted just prior to last earnings that I believe that AAPL is stuck inside an extremely narrow PE range. Prior to the 2008 crash, it was trading from 30 to 40 PE. During the crash it dipped to an all time low of 12, and since then rapidly rose to trade always between 18 to 22.8.

Basically, after each ER it spikes high then resets into the 18.x area, slowly climbing over 3 months into the 22.x range, then the cycle repeats. This ER was no exception, even with the news that S Jobs was leaving on medical grounds. The low we hit was $326 (a PE of 18.0 would have been $322.38).

So, where is the S Jobs discount in all of this? It’s worth noting that the last time he left on medical leave, it was just after the credit crunch crash. AAPL hit an all time low PE of 11.35, and after that the new PE range of 18-23 was established. There was no pop the day he came back as the date was predetermined.

We hit an all-time high of 360.00 and promptly pulled back. It’s worth noting that not only is 360.00 an eye-candy round number, it is also a PE of 20.1. Is this significant? Is the *new* S Jobs discount simply a compression of the range from 18-23 to 18-20? Or is this simply a pullback after hitting the .5 fib in PE terms? Are we still headed to a PE of 22 just before the next ER anyway? Are fibs in PE useful? Let’s examine.

18-22, range of 4. Thus:

.382 = PE of 19.528 = $349.75
.500 = PE of 20.000 = $358.20
.618 = PE of 20.472 = $366.65

And just for reference, PE of 22 is $394.02.

Is PEG useful? While “common wisdom” says that a PEG of 1.0 is fairly valued, for the last 5 years AAPL has had a PEG range of 0.74 to 0.17. The EPS growth has been so astounding that a PEG of 1.0 has never been reached. PEG 0.6-0.7 was during the 30-40 PE days, then S Jobs leaves PEG was 0.17, back to 0.6 and been sliding ever since. PEG now is 0.2x. Is this where the S Jobs discount is more obviously seen?

Lastly, I’ll note that AAPL is 70% owned by large institutions, and they do not actively trade. They buy and sell large blocks. Perhaps ultra conservative metrics like PE and PEG are how they decide to enter and exit? I’ll continue to keep an eye on this, especially as we near the next ER.

Worth a read. If you don’t know who JLG is, look him up as well.

http://www.mondaynote.com/2011/01/23/inside-apple’s-numbers/

This is a well established and key metric for any analyst following the company.

HTC reported results. In 2010, they sold 24.6 million phones. Profit was $500million. That works out to $20.33 profit per phone.

IOW, HTC needs to sell 30 phones to make the profit that Apple makes selling one iPhone. Let’s say they managed to triple their profitability per unit; they’d still only make $61 a phone. I’ll leave you to draw your own conclusions.

Does Google have to copy EVERYTHING that Apple does?

I’ve been attacking this one from another angle, trying to understand what the big institutions are doing. It seems to me that the key is TTM PE.

Look at the URL below. Prior to the 2008 crash, AAPL was trading with a 30 PE, spiking up into the 40s, and then went south with the rest of the market, falling to 12 or so. Since then, it has rapidly gone back to a tight range of approx 18 to 23 TTM PE. That is, take the PPS range between each earnings, and apply TTM PE and you’ll see that for the last 4 quarters this range has held.

Last earnings it climbed in a straight line for weeks before, only to sell off the next day. The PE range held. For the sake of argument, let’s say big funds are using the simple rule to load up every time the PE dips below say 19, hold until 22, and then start unloading at 23. Does this insight give us a “floor” below which the PPS won’t fall? I’ll let you do the maths, as you need to use your own estimate of EPS to calculate the new TTM PE the day after earnings. You can’t fight the big boys; far better to figure out what they’re doing and hitch a ride.

Hope this is useful to somebody.

http://ycharts.com/companies/AAPL/pe_ratio#stats=true&zoom=5&comp=price