Apple (AAPL) has become one of the leaders in the smartphone industry and currently has a market value about $440 billion and cash flow generation of up to $50 a year, and sustainment of this cash flow could raise dividends and increase stock buybacks, says Bobby Edgerton, Co-Founder, Executive Officer and Principal of Capital Investment Companies.
“Apple has a market value of about $430 billion, $440 billion; if you back out the cash, the stock market says Apple’s worth $300 billion. They’re generating between $40 and $50 billion in cash a year, so depending on which figure you take, that stock is selling at about six times cash flow,” Edgerton said.
If Apple continues to generate the same cash flow, for example $50 billion in the next six years, they will be generating enough cash to buy back the whole company, Edgerton says. The question that remains, according to Edgerton, is how AAPL will manage the cash.
“Now, how does Tim Cook manage a business with Steve Jobs no longer behind the scenes, what they do with their cash? Do they raise the dividend? Do they buy back more stock?” Edgerton said. “What is probably predictable is Apple is going to be a prodigious generator of cash over the years.”
Apple Inc. (AAPL) Expected to Add Buybacks and Increase Dividend
April 14, 2014
Apple Inc. (AAPL) Has Potential for $90 Billion Free Cash Flow This Year
November 10, 2015
QUALCOMM, Inc. (QCOM) and Apple Inc. (AAPL) Well Established in Shift to Mobile and Cloud With Up to 8% Cash Flow Yield
October 08, 2013
Baxter International (BAX)’s IVIG for Alzheimer’s Could Drive Significant Performance
March 19, 2013
Analysts Expect Apple Inc. (NASDAQ:AAPL) to Increase Dividend Payment at 10% Annualized Pace
October 27, 2016
