Apple (AAPL) Could Be Big Winner from Trump's Tax Policy
- Record-setting rally pushes on as S&P ends week up 3 percent
- Trump's Cohn Pick Most Bullish Sign Yet for Banks - Cowen
- Unusual 11 Mid-Day Movers: (IDXG) (INVN) (EBS) Higher; (SCON) (DTEA) (DLTH) Lower (more...)
- 21st Century Fox (FOXA) offers to acquire Sky for GBP10.75/share
- Coca Cola (KO) Announces James Quincey to Succeed Muhtar Kent as CEO; Kent to Continue as Chairman
Get the Pulse of the Market with StreetInsider.com's Pulse Picks. 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 StreetInsider.com Premium Free!
You May Also Be Interested In
- Ocean Power Technologies (OPTT) Reports Q2 Loss of $0.25/Share
- General Electric (GE) Raises Quarterly Dividend 4.3% to $.24; 3.1% Yield
- Jefferies Raises Price Target on Finisar (FNSR) to $37 Following 2Q Beat and Raise
Create E-mail Alert Related CategoriesAnalyst Comments, Politics
Related EntitiesDonald J. Trump, Sanford C. Bernstein, Earnings, Toni Sacconaghi
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!