Nice timing, with the stock at a 3-month low.
With Apple shares in free fall Friday, some investors’ thoughts turned to what Braeburn’s Robert Paul Leitao has called ”the biggest asset transfer from an enterprise to its shareholders in history —Apple’s plan to return 100% of its massive cash hoard to investors.
Supply-and-demand suggests that as hundreds of millions of shares go out of circulation, the stock will necessarily rise. But by how much?
In a reprise of the useful exercise he posted last April, friend-of-the-blog Jeff F offers some estimates:
With $70B left in its repurchase program (Apple posted a nice table of this online), Apple can purchase $341M shares at $205 repurchase price. That effectively bumps forward EPS from $13.25 to $14.27 EPS. If the multiple just stays the same at 16, for example, the implied price per share increases from $211.99 to $228.39.
Jeff F continues:
Apple has $237B of cash and marketable securities, so it’s expected that Apple will update its repurchase program on its May earnings call. Another $100B buys even more shares back.
Click to enlarge.
Jeff’s take: Of course Apple will do this over time, but it illustrates the impact of every shareholder owning a higher % of Apple as shares are repurchased.
What’s changed from last April? The current share price and forward EPS projected by Wall Street at $63 billion, a conservative 5%.