468x60 Ads

Barron's: Apple's cash reserves can not affect the dividend to shareholders

U.S. financial magazine "Barron's" website article points out, Apple's stock price this year has risen by 18%, but its price-earnings ratio is very low, Apple should consider dividends to shareholders. The following is the article for details:  Sometimes your luck is particularly good, for example, you bought at the beginning of Apple's stock, and holds to the present. Apple's share price performed very well this year, until now risen by 18%, while the Nasdaq index fell by 4%.   But there are some investors that Apple's performance can be better. As of last Friday's close, Apple's stock price is $ 381.02, if the projected $ 34.76 based on Apple's earnings per share, its current price-earnings ratio is only 11 times. Apple currently holds cash equivalent to about $ 87 per share, if compared with the value, price-earnings ratio is in a very low level.   For an expected earnings per share increased by about 26% of the enterprises, Apple's stock price has incredible low.   Currently, there are many successful technology companies are at a very low price level, but because Apple's stock price so low was more difficult to understand, because Apple's too good a performance.   U.S. institutional investors Sanford Bernstein analyst (Toni Sacconaghi) Investment Report released last week that, in the Russell 1000 Growth Index (Russell 1000 Growth index) among the top 10 stocks in the U.S. apple market-growth market the scope of the fund's largest stock holdings. This means that these growth-oriented funds have been received by Apple earnings, so that these funds can no longer buy more Apple stock.   Apple shares held by "saturation" of the state already is nothing new, but Sacconaghi's analysis of this report is extremely unique. The report notes that the stock market in the U.S. market, a total of 725 mutual fund assets under management exceeding $ 1 billion, but only 6.6% of mutual fund money to buy Apple stock, only the Russell 1000 growth index than buying Apple stock a high proportion a little bit.   Apple is a growth-oriented stocks, but the current "overweight" size is too small. Today the situation is that Apple's market capitalization as the nation's second-largest company, the company size is too large, so that a variety of fund holdings of Apple stock investment ceiling so inhibited.   Sacconaghi said he had complained that many fund managers, they are very optimistic about Apple's stock room for growth, but also willing to continue to buy Apple stock, but the key question is assigned to a single stock investment funds have all been used over.   Another aspect, even more difficult to understand is supposed to continue to buy Apple stock value investors, are gradually "reduce" the stock investment. Currently, the U.S. largest value-based investment fund assets under management in only 0.4% of its assets to buy Apple stock, Apple's stock value is much lower than the total value of fund assets under management of 2.5% average.   This means that Apple's stock on the growth-oriented investors and value investors are not attractive. Most of the global fund management assets of value investors to grasp.   The current focus is only a few companies like Apple, the provisions of these companies are very large, have huge cash reserves, but refused to pay dividends or repurchase stock. Sacconaghi said that this is the value investors are not the key reason to buy Apple stock.   Sacconaghi said that in the S & P 500 companies ranked in the top 25, with 22 dividend to the shareholders, while the three non-dividend companies, Apple is one of them. The other two are Google and Warren Buffett (Warren Buffett)'s Berkshire Hathaway Inc. (Berkshire Hathaway).   Sacconaghi hope that the future of Apple's board of directors to the shareholders according to distribute some of the dividends, the reasons put forward are very reasonable. Sacconaghi said Apple's third quarter results, its cash and cash equivalents totaled about $ 81.6 billion. Expected to end the first quarter of next year, Apple's cash and cash equivalents will total more than $ 100 billion.   For value investors, this is just a very dangerous signal. Sacconaghi said, although value investors believe that Apple made ​​a lot of money, but investors should get a share of proceeds. They will want to return some cash to its Apple so that they are free to use this part of the cash.   Sacconaghi believes that Apple has such a huge cash reserves, which may lead to a range of issues. For example, consider it improper for the acquisition, holdings of foreign cash depreciation. Apple is currently located overseas, 66% in cash, money back if the United States to pay a large * payment.   In fact, not difficult to solve two problems, the real problem is that Apple has plenty of cash, and investors have been difficult to return. Apple's balance sheet, through a fixed income, financial investment, other investment return to shareholders of record of very few.   Compared with Apple, Exxon Mobil annual basis was 2.3% dividend to shareholders, the company and it has been trying to strike a balance between the interests of investors.   Apple's cash reserves are still growing, Sacconaghi believes that Apple's free cash flow compared to the actual performance of the stock 2% lower, and is permanent.   Apple has changed growth pattern may, iPhone sales could drop significantly.   Sacconaghi said that if the current cash balance last year Apple may distribute to shareholders a 5% cash flow to shareholders an annual dividend of 5%, but also can increase the annual $ 20 billion non-cash reserves.   The annual dividend of 5% is quite high, in the 25 largest technology companies in the United States is the highest.   Sacconaghi also notes that Apple's current CEO, Cook does not oppose the use of cash, but he also stressed, in order to cherish the memory of the late former Apple CEO Steve Jobs, by April next year will not pay dividends, because Steve Jobs during his lifetime against the dividend .   If Apple will be 40% per year in cash to shareholders and investors schools, the annual dividend rate will reach 4%.   In the report, Sacconaghi also pointed out some facts, company size increases, more and more difficult to attract new investors, with the cash flow growth, more difficult to attract value investors.


Post a Comment

Apple Zone © 2011