Apple Stock Buyback Tops $20B In Second Quarter

Apple Inc. (AAPL) has been in buy-back mode ever since President Donald Trump signed his tax bill into law. But the size of the Cupertino, California-based company’s share repurchase program is massive, with estimates put the buy-back at $21 in the second quarter alone.

That’s according to an analysis by S&P Dow Jones Indices. Analyst Howard Silverblatt told Barron’s that Apple likely repurchased $20.7 billion in stock during the June quarter. He cautioned the sum is an estimate, not a final number. What Silverblatt does know is that Apple’s actions in the second quarter will amount to it being the second-largest quarterly buyback among S&P 500 companies. The first one goes to Apple as well. In the first quarter, it repurchased $22.8 billion in shares. (See more: Apple Stock Could Spend Months Testing the $200 Level.)

More Large Stock Buybacks Expected From Apple

But it's not over for Apple. According to Barron’s, $10 billion of the roughly $20 billion worth of shares it bought back in the second quarter fell under the company's previous buyback plan. The other half is part of its new plan to purchase $100 billion of its shares.

Ever since President Trump’s tax reform bill came into effect, companies have been announcing plans to buyback shares and raise dividends. After all, with the corporate tax rate going from 35% to 21% they have more free cash to spend. In the first quarter of this year, the companies in the S&P 500 delivered on that promise, buying back $189.1 billion of shares, according to S&P Dow Jones Indices data. That amount surpassed the old record hit in the third quarter of 2007 by close to 10%, noted Barron’s in a report in late June. In the first quarter, twenty companies in the index accounted for close to half of the stock buybacks with Apple leading the charge. (See more: Apple Led Company Stock Buybacks During Q1.)

Apple Valuation Tied To Stock Buy Backs

The iPhone maker’s aggressive stock repurchase strategy is doing more than enriching investors. According to BMO Capital, Apple is enjoying a higher valuation compared to the S&P Index lately because of stock buybacks and not because of sales of its flagship iPhone. “AAPL traded nearly at parity with the S&P back in 2014 as excitement for the first large screen iPhones (iPhone 6 and 6 Plus) was building,” wrote BMO Capital analyst Tim Long in a recent research note. “AAPL is currently trading at only an 8% discount to the S&P (down from 17% three months ago), while on a three- and five-year historical average, it has typically traded at a 23% and 20% discount, respectively. We believe the stock is trading at a premium relative valuation based primarily on the huge stock buyback program.”