Saturday, January 20, 2018

Pen And Ink, A Cocktail Napkin, And Some Idle Time On My Hands -- Nothing About The Bakken -- January 20, 2018


February 16, 2018: in the note below I came up with a "target price" of $193/share for AAPL. That was January 20, 2018, almost a month ago. Now, today, Business Insider says Wall Street analysts polled by Bloomberg have an average price target of $191, nearly 12% greater than the current price. 

Original Post

 From the weekend print edition of the WSJ, Saturday, January 20 - 21, 2018, doing the math, analysts suggest that AAPL will declare a special dividend of $2.35/share once the repatriation dust settles. In addition, the analyst suggests Apple will target $71 billion in share buybacks, and increase the dividend by $1.00/share over two years. The current (annual) dividend is $2.52. I can't post the electronic link because I'm reading this in the print edition. But I'm sure the story is easy to find for those interested.

All things being equal (and, in this case, they are not) a $71-billion buyback will boost the current $180-share-price to $193/share.

The current dividend works out to 1.41% per annum. Disregarding the special one-time dividend, a $3.50 dividend for a $193-share stock comes out to ... drum roll ... 1.8% per annum.

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or what you think you may have read here. If this is important to you, go to the source. And get your own cocktail napkin.

Disclaimer: I make a lot of simple arithmetic errors, but no algebra is required in accomplishing the the math above. A lot of assumptions were made, and a lot of data was taken from unnamed analysts, so the likelihood of any of this being accurate is pretty remote. On the other hand, the law of large numbers often holds, and the numbers themselves look very, very realistic.

No comments:

Post a Comment