“Apple’s $200 billion cash hoard, combined with its now $69 billion in annual free cash flow, often doesn’t get the credit it deserves — especially now that the company has proven to investors it is willing to aggressively return a good chunk of this cash to shareholders through dividends and repurchases, with a heavy emphasis on the latter,” Daniel Sparks writes for The Motley Fool.
“Since Apple began repurchasing shares in late 2012, the company’s total share count has been reduced by about 13.3%,” Sparks writes. “But, going forward, by how much can Apple realistically continue to reduce its share count?”
“With no reason on the horizon for Apple’s annual free cash flow to take a hit in the coming years, it’s quite possible that Apple could reduce its share count by $45 billion every year for the next five years,” Sparks writes. “Assuming the average purchase price for Apple shares over the next five years is about $150, up 28% from where shares are trading today, total share count could be reduced from about 5.7 billion today to 4.2 billion in five years, or by 26%. In other words, Apple’s earnings per share could realistically grow about 5% annually over the next five years from repurchases alone — not bad for a market leader trading at just 13.5 times earnings.”
Read more in the full article here.
MacDailyNews Take: Hopefully, Apple’s been executing significant buybacks throughout the summer AAPL sale!