Q1 2017 results were above expectations. OK, some people are still complaining, that there was one week more, that sales of iPads were weak or that most revenues were generated by iPhone. Well, my answer is simple. Share price +6.5% shows, that results were good. Let’s look in details:


iPhone sales in units is growing. Awesome. Services are growing (this is due to iPhone sales and I guess that also due to more purchases by current users). Macs flat, iPads so so. Well ok, there is a problem with Macs and iPads, but scale of these problems is much smaller and it is more about making noise than real game changer for business.

It was also a good quarter for shareholders (I love this graphics below):


We can see that company bought back shares for $11b. There were almost $15b return to shareholders, with market cap of $680b it is return of 2.2% in single quarter. Apart from that there is still $7b more net cash. Can I expect something more?

Let’s look on valuation.

P/E around 14.5

P/E when adjusting market cap for net cash (no taxes assumed) -> P/E = 11.5

Well, it is not that cheap it was when I was buying J


What’s next? 10th anniversary is coming, which I hope will be a good occasion for breakthrough innovations. Also when I am reading news about Apple I feel that there is still rather negative sentiment (always complaints about something). On the other hand there are always worse and better quarters. This one was better, previous ones were also good. Valuation nominally is not very high comparing to other companies, but historically Apple was traded on low multiples. On the other hand services are recurring and potentially high multiple business.


Altogether I think that some investors might be interested in taking profit. Currently I am not one of them. I believe in long term benefits and I hope that this quarter is the beginning of the new Apple ‘super-cycle’. Cash adjusted valuation is OK (though I would be afraid to buy shares currently). I see my take profit level at around $140 (P/E without cash adjustments of around 15.5, historical highs, but on the other hand consensus is for strong improvement in 2018…).


Disclosure: AAPL – Long