Morningstar: Apple remains fundamentally undervalued after EU tax grab

“We will maintain our $133 fair value estimate for Apple for now, even though the company was hit with a EUR 13 billion ($14.5 billion) tax bill by the European Commission, which ruled that Ireland gave illegal tax benefits to Apple,” Morningstar writes.

“We concede that $3 per share, or just over 2% of our fair value estimate, is at risk with the ruling, but the timing and amount of the final payment remain uncertain. Apple will not take a financial charge for the tax bill in its near-term results, and the fine may be placed in restricted cash but will not be immediately paid out,” Morningstar writes. “We expect both Apple and Ireland will appeal the ruling, and a final decision could take years.”

“Apple has almost $215 billion in international cash on hand, so the record tax bill will make only a small dent in the firm’s cash cushion,” Morningstar writes. “Further, Apple indicated that the ruling will not have an effect on its long-term tax rate, presumably because its Irish tax structure in question was modified in 2015. Regardless, we continue to view Apple as fundamentally undervalued, and the company remains one of our best investment ideas in the tech sector.”

Read more in the full article here.

MacDailyNews Take: Apple’s share price could double and it’d still be undervalued.

Obama admin worries EU’s Apple decision will cost U.S. taxpayers; Bernie Sanders applauds EU tax demand – August 30, 2016
Ireland doesn’t want Apple’s $14.5 billion in so-called back taxes – August 30, 2016
U.S. Treasury: The European Commission’s retroactive tax demands on Apple are unfair – August 30, 2016
EU demands Apple pay massive $14.5 billion in taxes plus interest – August 30, 2016
Apple CFO Maestri: Despite EU tax ruling, we will continue to invest in Ireland – August 30, 2016
Apple CEO Cook blasts European Commission for ‘ignoring Ireland’s tax laws, upending the international tax system’ – August 30, 2016
European Commission to rule Ireland’s tax arrangement with Apple illegal – August 29, 2016
Ireland prepares for a fight with EU over Apple tax clawback – August 29, 2016
U.S. government warns EU: Do not hit Apple with a massive back tax bill – or else – August 25, 2016
European Commission denies anti-U.S. bias after U.S. Treasury intervention over Apple, Amazon tax probes – August 25, 2016

[Thanks to MacDailyNews Reader “Arline M.” for the heads up.]


  1. Apple must not pay! Apple should sue the EU commission for court cost and lawyer fees. If Ireland thought what they received in taxes was fair, and Apple paid it, it’s a done deal. The EU should sue Ireland to force them to bring their tax rates inline with the rest of the EU.

    Apple must not pay! Every government in the world will see that big target at the center of the Apple logo.

    This is just another reason publicly traded companies should not just sit on cash. They should pay 80% of the profits to shareholders. India, China, Russia, they will sue Apple as well. Pay the money out to shareholder, remove the target. Fight for laws that exempt the corporation from paying taxes if they pay out in dividends 80% or more in profits to shareholders.

  2. Hardly a day goes by in which we don’t see yet another example of why the Brits dumped the EU. This action against Apple is little more than organized theft. If the EU has a problem with the LEGAL deal made between Ireland and Apple, their issue should be with Ireland, not Apple.

    Apple should negotiate the fine down as much as possible, then stop shipments of new products to the EU, raise the prices of older products still on the shelves in the EU, and start shutting down operations in the EU. Let them use Windows and Android. Outside of a tax deal, Ireland has nothing special to offer Apple anyway. Not unless they grow a pair.

    Ireland should show enough strength of character to say this is our mess, And we will,handle all fines. In which case Apple could maintain their relationship with Ireland. If anyone from any other part of the EU wants Apple products they can go to Ireland or the UK to get them.

    1. You do realize that companies “sitting on cash” has absolutely nothing to do with a decision on whether they have a tax liability or not, and that even if the pay 80% of profits to shareholders, those profits are what’s left AFTER TAX. With the amount of cash flow that Apple generates, they are a target even if they were not carrying this much cash on the books. They can pay off this debt with one financial quarter worth of cash flow.

  3. EU playing big brother. I think I saw that somewhere…

    Bah, screw EU!
    Where were you in the ’80? when Apple did settle in Ireland?

    Sue Ireland for misconduct, not Apple!


  4. “Apple’s share price could double and it would still be undervalued.” That’s absolutely ridiculous. Apple could go up $10 today and short-selling will be called for tomorrow. Apple has become one of the crappiest tech investments around and it’s unlikely anything short of a miracle will change that. I’m willing to bet every tech company will soar and Apple will be stuck in six feet of mud. Tim Cook is the (bad luck) albatross of Apple. Nothing good will come from him. He’d better stick to his diverse emojis because the EU is going to pick Apple’s bones clean.

  5. Ireland should simply reign in the EC by telling them to take a long walk off a short pier. If they do not want the money then let them not cash the cheque. If not then any country in the EU will have a bunch of centralized commissioners dictating any countries tax laws. So much for financial and eroding cultural independence.

  6. Again, someone should have read the fine print before joining the union. Who knows if Ireland did and thought that they could continue their tax laws as they always have or did the EU put in that they had to change and no one was paying attention.
    At this point the EU thinks they can force this and Ireland thinks they have the right to continue as they always have. I don’t see how Apple has any issue here. They were only doing as they were told and have done since 1980.

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