- Though the change in financial policy is credit negative, says Moody's, there's no negative update to Apple's (NASDAQ:AAPL) Aa1 credit rating and stable outlook.
- Obviously a reduction of $163B in cash weakens the company's liquidity profile, but, says Moody's, the enduring strength of Apple's business and annual free cash flow of more than $40B (even after dividends) eases most of that concern.
- As of year-end, Moody's figures Apple's adjusted debt to EBITDA ratio at just over 2x (including the $38B repatriation-related tax liability). With tax reform giving the company greater flexibility to access offshore cash flow (and thus less need to issue debt), Moody's sees significant de-leveraging over the next few years.
- The agency expects leverage to slide to the low 1x range within two years.
- Not immune to the broad selloff today, Apple is lower by 4%.
- Previously: Apple down more than 2% as results/guidance digested (Feb. 2)
- Now read: Why Is Apple Down 3% After Crushing Earnings?
Original article