“The author takes a short-term look at Apple’s share price, which has not done well in the past year or so. However, the buyback has been around for a couple of years, and the stock has done extremely well since the program started,” Maurer writes. “Net income has risen by 10.15% over the ’13-’16 Q2 period, but earnings per share are up by 31.65%. The buyback has reduced the share count significantly, and normalized earnings per share are benefiting as a result. With the share count down by more than 16% over this period, you have to figure the current dividend payout has been bumped higher a bit as well. Even if we look at results compared to last year’s quarter(s), the buyback is helping soften some of the earnings per share declines.”
“As of Tuesday’s close, Apple’s dividend yield was 2.40%, while the 30-Year US Treasury bond was yielding just 2.14%,” Maurer writes. “With rates so low, it makes sense to repurchase shares and eliminate dividend payments, especially when your cost of debt ends up being lower than the dividend yield. There’s a cash flow savings there, which can go back into the business for any number of uses.”
Much more in the full article – recommended – here.
MacDailyNews Take: It not only makes sense for Apple to be buying back shares in this market, it would be stupid not to be executing share repurchases. In fact, one would be on an even firmer foundation arguing for even more buybacks than none at all.