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Smart Investing Newsletter Archive

Ireland Says No Thank You to Apple's $14.5 Billion in Back Tax

Tuesday, September 6th, 2016

The EU commission released its findings today, stating that Apple owes $14.5 Billion in back taxes to Ireland.

The interesting part of the story is that both Ireland and Apple are appealing the ruling. Apple says it has complied with all tax regulations in Ireland, and Ireland confirmed that notion.

The EU is overstepping their boundaries in this case, as they do not have the right to set the tax structure in Ireland. So why does Ireland not want to back tax?

They want to maintain their relationship with U.S. companies. Ireland has the lowest corporate tax rate at 12.5%. For comparison, the U.S. has a corporate tax rate of 35%. This has led to many U.S. companies doing business overseas with Ireland.

Currently, U.S. companies employ 140,000 people in Ireland. Apple has had a long-standing relationship in the country, as it built its first Irish factory in Cork, Ireland in October 1980.

The factory started with 60 employees and Apple has grown its Irish workforce to 6,000 people.

Corporate tax reform continues to be a huge area of concern as it continues to bring about many different problems.

Today's company of the day is Abercrombie & Fitch (ANF).

The current price is $18.25 and the 52-week range is $16.49-$32.83. Today the company reported a loss of 19 cents for this recent quarter, which sent the stock price down 20% for the day.

Abercrombie & Fitch is going through some restructuring measures, which could mean there is potential value going forward.

With the fall in stock price, the dividend yield has increased to 4.4%. The balance sheet remains healthy as the debt/equity is 27%, well below the industry average of 59%.

Looking forward to January 2018, estimated EPS of $1.06 gives us a target sell price of $17.49. Even with this pullback, we would recommend being patient with the stock.

Do the research and understand what it going on with the company before jumping blindly.

Do you have a question or a company you would like us to take a look at?
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