NEW YORK (TheStreet) -- Activist investor Carl Icahn met with Apple (AAPL) CEO Tim Cook this week to encourage the maker of the iPad to increase its share buyback program. After the meeting, Icahn voiced his support, tweeting, "We pushed hard for a $150 billion buyback. We decided to continue dialogue in about three weeks."
For the third quarter ended June 29, Apple returned $18.8 billion to shareholders through dividends and share buybacks, with a total $100 billion to be delivered by 2016.
Apple shares moved 2% higher to $486.27 as of 11:50 a.m. EST. The stock is leading the S&P 500 which is up 0.81%.
'Real Money' contributor Bret Jensen says if there is a market pullback over the coming weeks, Apple will be a share to buy.
"The launch of the new 5S/5C iPhones appears to be solidly beating expectations and helping the company gain market share again," he says.
TheStreet Ratings team rates Apple as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:"We rate Apple (AAPL) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- AAPL's revenue growth has slightly outpaced the industry average of 0.7%. Since the same quarter one year prior, revenues slightly increased by 0.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- AAPL's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, AAPL has a quick ratio of 1.54, which demonstrates the ability of the company to cover short-term liquidity needs.
- 41.67% is the gross profit margin for Apple which we consider to be strong. Regardless of AAPL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AAPL's net profit margin of 19.53% compares favorably to the industry average.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Computers & Peripherals industry and the overall market, Apple's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- Apple's earnings per share declined by 19.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, APPLE INC increased its bottom line by earning $44.16 vs. $27.67 in the prior year. For the next year, the market is expecting a contraction of 10.9% in earnings ($39.33 vs. $44.16).
- You can view the full analysis from the report here: AAPL Ratings Report
Written by Keris Alison Lahiff.