Apple is all about the buybacks, Nemanja Vujcic writes for Seeking Alpha:
For the past seven years, Apple has relentlessly pursued a highly aggressive buyback policy. Over 313 billion dollars have been spent over this period on buybacks. This is a factor which was completely absent in the high-growth years… Therefore, if growth in Apple’s revenue from the wearables and services categories was the catalyst for the stock’s bull ride, it is the expectation of future buybacks that makes the current price reasonable. The total number of outstanding AAPL shares has decreased by almost a third, 32.8% to be more precise, since 2013. It is truly an outstanding achievement that Apple, despite all these buybacks and skyrocketing research expenses, continues to have an ever-growing amount of cash at its disposal…
When you read projected EPS for a company, those numbers assume that the number of outstanding shares in the future will remain the same as it is now. In the case of a company like Apple, which is obviously going to continue to pursue aggressive stock buyback programs, using EPS projections unadjusted for a reasonably expected lowered outstanding stock count results in a completely distorted picture of the stock’s true potential…
Neither the current, nor projected, revenue, and income growth of Apple justifies the premium valuation which the stock is currently enjoying.… The only reason why AAPL shares deserve their premium valuation is the logical expectation that the aggressive stock buyback program will continue.
MacDailyNews Take: Vujcic’s analysis – that Apple is all about the buybacks – is fatally flawed, as it totally ignores the potential for Apple to introduce new products. Apple is not a stagnant enterprise.