Is Apple Now Officially a Value Stock?http://www.fool.com/investing/general/2013/01/24/is-apple-now-officially-a-value-stock.aspx Evan Niu, CFA
January 24, 2013
Transitions can be hard, and Apple's (NASDAQ: AAPL) monstrous drop today following its earnings is about as painful as it gets for shareholders. The transition from growth to value has been a long time coming, and Apple shares have long traded like other value companies even as it put up the type of growth that small caps long for.
The best of both worlds
Apple's prospects remain much more promising than either Microsoft's or Intel's, even though its results were also hurt by the struggling PC market.
At current prices, Apple doesn't even need to get back to growth rates that high anymore. The company now pays out $2.65 per quarter in dividends and has recently instituted a share buyback program. With recent weakness, I would have liked to see an aggressive increase in the share buybacks to take advantage of Apple's pullback, but CFO Peter Oppenheimer said the company expects to return $45 billion to shareholders over the next three years between dividends and buybacks.
Apple's buyback program is intended to offset equity dilution, and in that sense, the buyback is accomplishing its stated task. Shares outstanding declined sequentially by a marginal amount, but that's better than the steady increase investors have been seeing without the program.
Cash is king