Followers | 686 |
Posts | 142386 |
Boards Moderated | 35 |
Alias Born | 03/10/2004 |
![](https://investorshub.advfn.com/uicon/35728.png?cb=1539773763)
Wednesday, June 05, 2024 10:19:32 AM
By: Barchart | June 4, 2024
Apple Inc (AAPL) stock has risen substantially since releasing its fiscal Q2 earnings on May 2. But it could still be worth almost 25% more over the next year based on its strong free cash flow and FCF margins.
In morning trading on June 4, AAPL is at $194.19, up 14.7% from May 1 when it was at $169.30 per share. In my last Barchart article on May 3, “Apple Stock Surges on Buyback and Dividend News - OTM Options are Cheap Here, " I discussed the company's free cash flow and upside potential.”
In that article, I showed that AAPL stock could be worth as much as $217.44 per share. That still provides a +12% upside over today's price.
But since then analysts have raised their revenue projections, especially for next year. As a result, I can project that AAPL stock could be worth as much as $265.32 over the next year. That is almost 37% higher than today. I will show how I derive this target price below. Note that the average of these two target prices is $241.38, or 24.3% higher than today.
Projecting Apple's FCF
In the last six months, as I pointed out in my prior article, Apple made $58.2 billion in free cash flow (FCF) on $210.328 billion in sales. That works out to an FCF margin of 27.7% in the past six months.
Moreover, as I pointed out in my recent May 23 GuruFocus article on Apple, the company generated $103 billion in FCF in the trailing 12 months (TT) ending March 2024. That represented a similar 27.2% of sales ($381.6 billion), close to the 27.7% 6-month margin.
We can use this FCF margin to estimate its future cash flow. For example, analysts now project that sales will hit $410.7 billion for the year ending Sept. 2024. That is projected to be 6.2% higher than this fiscal year ($386.88 billion).
Projecting A Target Price
So, if we multiply the $410.7 billion in 2025 projected sales by the 27.7% FCF margin it made recently, FCF could rise to $113.8 billion. That is 10.5% over the TTM FCF of $103 billion.
As a result, AAPL stock could be worth as much as $4.06 trillion using a 2.8% FCF yield metric. That is the same as multiplying FCF by about 36x. This market cap is 36.6% over today's market cap of $2.975 trillion. In other words, the stock could be worth 37% more at $265.32 per share.
Why did I use a 2.8% FCF yield metric? For one the company is buying back at least 2.5% of its shares annually. I showed how the share count has been falling about this amount every year in my GuruFocus article mentioned above. So, the buyback yield is about 2.5% for shareholders.
Moreover AAPL stock also has a 0.5% dividend yield. Altogether this works out to a 2.8% to 3.0% shareholder yield for investors. That is how the market is willing to value the stock.
Analysts surveyed by AnaChart.com also have a higher price target. The average of 32 analysts' price targets is $206.35. That represents a potential upside of at least 6% over today's price.
The bottom line is that AAPL stock still looks cheap here based on its powerful FCF. The average potential upside is almost 25% ($241.38 per share) from here, based on analysts' revenue estimates and its strong FCF margins.
However, keep in mind that this could take up to a year to occur. It won't necessarily happen overnight. Analysts' revenue estimates for next year have to come into focus by the market as achievable. If that occurs, AAPL stock still has a good upside for long-term investors, based on its strong FCF margins.
Read Full Story »»»
![](http://studentaid.gov/universal-navigation/assets/us_flag_small.png)
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Caveat emptor!
• DiscoverGold
Recent AAPL News
- U.S. Stocks Close Higher; Nasdaq Outperforms • IH Market News • 07/01/2024 09:10:17 PM
- Dow Dips, Nasdaq Gains, Oil Prices Rise • IH Market News • 06/26/2024 11:00:03 AM
- SolarEdge Stock Falls 13%, Wegovy Approved in China, Grail Nasdaq Debut, Apple Rejects Meta Chatbot • IH Market News • 06/25/2024 10:36:11 AM
- UPS Divests Coyote Logistics in $1.025 Billion Deal with RXO, Under Armour Agrees to $434 million Settlement, and More News • IH Market News • 06/24/2024 11:00:20 AM
- Trump Media Resells Stocks and Warrants; KB Home Exceeds Q2 Expectations, and More News • IH Market News • 06/20/2024 10:55:11 AM
- Apple The Exchange TRX to welcome its first customers this Saturday, June 22, in Kuala Lumpur • Business Wire • 06/20/2024 02:00:00 AM
- Nvidia Overtakes Microsoft To Become World’s Most Valuable Company • IH Market News • 06/19/2024 09:32:08 AM
- Fisker Files for Bankruptcy, Chegg Stocks Rise on 23% Workforce Reduction, and More • IH Market News • 06/18/2024 11:02:13 AM
- Goldman Sachs Raises S&P 500 Forecast for 2024; Disney Secures Deadpool & Wolverine in Chinese Cinemas, and More • IH Market News • 06/17/2024 10:49:12 AM
- Adobe Soars 15% Pre-Market; Visa and Mastercard Encounter Hurdles in $30 Billion Agreement, and More • IH Market News • 06/14/2024 11:21:47 AM
- Tesla Surges 5% in Pre-Market; Virgin Galactic Drops 9% Following Reverse Stock Split, and More News • IH Market News • 06/13/2024 11:24:25 AM
- Tamer Than Expected Inflation Data May Spark Early Rally On Wall Street • IH Market News • 06/12/2024 01:07:00 PM
- Paramount Ends Skydance Talks, Oracle Shares Surge 8.7% on New Partnerships, and More News • IH Market News • 06/12/2024 11:19:10 AM
- U.S. Futures Rise on Fed Decision; Oil Gains on Demand Forecasts • IH Market News • 06/12/2024 11:13:28 AM
- Nasdaq, S&P 500 Recover From Early Weakness To Reach Record Highs • IH Market News • 06/11/2024 08:49:55 PM
- FDA Panel Supports Eli Lilly’s Donanemab, Rio Tinto Expands Stake in Boyne Smelters, and More News • IH Market News • 06/11/2024 11:11:40 AM
- Apple extends its privacy leadership with new updates across its platforms • Business Wire • 06/10/2024 09:40:00 PM
- Apple empowers developers and fuels innovation with new tools and resources • Business Wire • 06/10/2024 09:00:00 PM
- macOS Sequoia takes productivity and intelligence on Mac to new heights • Business Wire • 06/10/2024 06:43:00 PM
- watchOS 11 brings powerful health and fitness insights, and even more personalization and connectivity • Business Wire • 06/10/2024 06:43:00 PM
- iPadOS 18 introduces powerful new intelligence features and apps designed for Apple Pencil • Business Wire • 06/10/2024 06:43:00 PM
- iOS 18 makes iPhone more personal, capable, and intelligent than ever • Business Wire • 06/10/2024 06:43:00 PM
- Introducing Apple Intelligence, the personal intelligence system that puts powerful generative models at the core of iPhone, iPad, and Mac • Business Wire • 06/10/2024 06:43:00 PM
- visionOS 2 brings new spatial computing experiences to Apple Vision Pro • Business Wire • 06/10/2024 06:43:00 PM
- Updates to the Home experience elevate entertainment and bring more convenience • Business Wire • 06/10/2024 05:37:00 PM
FEATURED BNCM and DELEX Healthcare Group Announce Strategic Merger to Drive Expansion and Growth • Jul 2, 2024 7:19 AM
EWRC's 21 Moves Gaming Studios Moves to SONY Pictures Studios and Green Lights Development of a Third Upcoming Game • EWRC • Jul 2, 2024 8:00 AM
NUBURU Announces Upcoming TV Interview Featuring CEO Brian Knaley on Fox Business, Bloomberg TV, and Newsmax TV as Sponsored Programming • BURU • Jul 1, 2024 1:57 PM
Mass Megawatts Announces $220,500 Debt Cancellation Agreement to Improve Financing and Sales of a New Product to be Announced on July 11 • MMMW • Jun 28, 2024 7:30 AM
VAYK Exited Caribbean Investments for $320,000 Profit • VAYK • Jun 27, 2024 9:00 AM
North Bay Resources Announces Successful Flotation Cell Test at Bishop Gold Mill, Inyo County, California • NBRI • Jun 27, 2024 9:00 AM