After a decent run in market, Apple (AAPL) released its earnings report for the last quarter. To give you a gist of the report I must begin by saying that EPS largely beat expectations, growing by almost double the expected figures. The company has also pledged to boost their buybacks by around $30 billion. The quarterly dividends have also increased by 8%.
Apple stocks have always given unusual results. There’ve been times when people completely gave up on the stock and just when one thought that the company had hit a dead-end, the prices surged. There have also been times when the stocks were doing pretty well but ended up in a disaster without giving a hint. This is exactly what happened in 2012. So, it’s actually the unpredictability of the stock that makes it rather risky.
The dividend payout has increased to some extent. An increase of 8% in dividends is what the company boasts of. This, the analysts feel, is not up to the industry standards. They feel that a dividend increase of 8% is more like what one would expect from a company like Coca-Cola that has been paying dividends for 50 years. Not from fresh dividend paying companies like Apple where a much higher dividend growth rate is expected.
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- AAPL 15-Year Financial Data
- The intrinsic value of AAPL
- Peter Lynch Chart of AAPL
Apple has also announced somewhere around $30 billion more for its buyback program. Obviously that is a humongous amount, especially when one considers the company’s buyback strategy in 2013.
A 7:1 Stock Split:
The company has devised a 7:1 stock split plan. Though the fact that stock splits have almost no effect on the overall business or stock prices is true, the split will only result in more float as the number of outstanding shares will go up to about 6 billion. 62% of the shares are held by institutions and one just needs to take a look at the huge volume of trading in Apple in 2012 to realize this. In other words, retail investors do not matter much in determining the price movement of this stock. Even though iPhones and Macs had a surprisingly strong quarter, iPad numbers have gown down in comparison. Apple has always been known for its own creative destruction where their own newer products slowly offset the older products before other companies do so. What’s even more disturbing is the fact that there has not been a new product since 2010, making it the second longest that Apple has gone on without one since Steve Jobs took over the reins in late 1990s. The iMac release in 1998 was followed by the iPod and iTunes in 2001. This was followed by iPhone and iPad in 2007 and 2010.
Apple stocks have always been unpredictable. The analysts have, for particular, been bear on the stock. The current release by far has been the best in terms of “hope” it has to offer to the investors. The goings of the market, for that matter, has been favoring Apple’s growth. Lets wait to see what unfolds in the coming quarters. For the time being, investing wouldn’t be a bad idea.