CalPERS Opposes Icahn's Apple (AAPL) Plan

NEW YORK (TheStreet) -- The California Public Employees' Retirement System (CalPERS), the largest U.S. public pension, is criticizing activist investor Carl Icahn's call for a larger Apple (AAPL) buyback program.

CalPERS owns more than $270 billion in assets, including 2.4 million shares of Apple as of Sept. 30. According to Bloomberg, the agency is speaking out against Icahn's statements that he will try to win shareholder approval for a plan to ask Apple for an increase in the size of its stock buyback program.

Apple's current strategy includes a plan that will give $100 billion back to shareholders through dividends and buybacks over three years. CalPERS agrees with the current plan.

Icahn has urged Apple to increase its buyback program since this past August. In a recent filing the billionaire investor disclosed that he owns 4.7 million Apple shares, or about 0.5% of the company.

Apple has not responded to a request for comment.

TheStreet Ratings team rates APPLE INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

"We rate APPLE INC (AAPL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. 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, good cash flow from operations, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • AAPL's revenue growth has slightly outpaced the industry average of 3.0%. Since the same quarter one year prior, revenues slightly increased by 4.2%. 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.
  • Although AAPL's debt-to-equity ratio of 0.14 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.40, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has slightly increased to $9,908.00 million or 8.45% when compared to the same quarter last year. In addition, APPLE INC has also modestly surpassed the industry average cash flow growth rate of 6.99%.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • 41.78% is the gross profit margin for APPLE INC 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 20.04% compares favorably to the industry average.

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