Apple (AAPL) Could Be Big Winner from Trump's Tax Policy

November 14, 2016 3:07 PM EST
Get Alerts AAPL Hot Sheet
Price: $120.00 +0.18%

Rating Summary:
    60 Buy, 10 Hold, 5 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 30 | Down: 30 | New: 23
Trade AAPL Now!
Join SI Premium – FREE

Get access to the best calls on Wall Street with's Ratings Insider Elite. Get your Free Trial here.

While Apple's (NASDAQ: AAPL) stock has been having a rough go of it since Donald Trump's election, Bernstein's Toni Sacconaghi sees the iPhone maker as a "big winner" from Mr. Trump's proposed 15% corporate tax policy, although overall tech earnings will be boosted much less than the broader market.

While the Tech sector's prevailing tax rate today only averages ~18-21%, or ~480 to 670 bps lower than the market overall, Apple's Tax rate is 26%. In addition, Apple has $216 billion in overseas cash.

Sacconaghi notes while Apple generates most of its earnings in very low cost foreign jurisdictions, it chooses to accrue taxes on its income statement for a portion (about 50%) of those offshore earnings, "resulting in a relatively high tax rate by tech-company standards (26%) and an unfathomably large foreign cash balance ($216B)."

"The upshot is that Apple will get both a meaningful earnings boost from a potentially lower tax rate, and has the potential to repatriate 37% of its market cap in offshore cash, which is the second highest percentage among the top 25 tech companies," the analyst said.

Shares of Apple are down 2.2% and down 4.6% since Trump was elected President.

Serious News for Serious Traders! Try Premium Free!

You May Also Be Interested In

Related Categories

Analyst Comments, Politics

Related Entities

Donald J. Trump, Sanford C. Bernstein, Earnings, Toni Sacconaghi

Add Your Comment