Apple and 10 Big Companies That Hoard the Most Cash



Sometimes you can actually have too much cash.

The corporate cash pile for U.S. non-financial companies rose to new highs in 2014, but that trend is expected to somewhat soften this year, according to Moody’s (MCO) Investor Service.

U.S. companies held $1.73 trillion in cash and liquid investments in 2014, up 4% from 2013 and more than double the cash level in 2007, according to a May 7 report by Moody’s. Cash flows from operations rose to an all-time high of $1.6 trillion, but is expected to dip to $1.5 trillion due to reduced capital expenditures in the energy sector this year, according to Richard Lane, the report’s author and a senior vice president at Moody’s.

Company cash used for capital expenditures, dividends, and share repurchases also hit record highs in 2014, while spending on acquisitions rose 20%, according to Moody’s. In comparison, aggregate revenue for companies in the report rose 5.6% in 2014 to $11.8 trillion, while company debt rose 7.3% to $4.72 trillion.
The report, published by the Moody’s corporate finance group, analyzed 1,137 Moody’s-rated U.S. companies as well as unrated companies like Facebook (FB), Yahoo! (YHOO), SanDisk (SNDK) and Nvidia (NVDA), given their significant liquidity, it said. The group does not cover financial services companies, which were excluded from the report.

Of that $1.73 trillion, nearly two-thirds ($1.1 trillion), was held overseas in 2014, up from $950 billion in 2013, the report said.

“Because domestic cash is consumed by dividends and share buybacks and is used to pay for the majority of acquisitions, we expect that overseas cash balances will continue to grow unless tax laws are changed to encourage companies to repatriate money,” Moody’s said.

The tech industry held nearly 40% of total cash in 2014, according to Moody’s. Other cash-flush industries included health care/pharmaceuticals, consumer products and energy.

So, here they are, the 11 companies that are hoarding the most cash. Together, they are hoarding a whopping $637.2 billion, 37% of the total hoarded cash reported by Moody’s.

TheStreet added ratings from TheStreet Ratings for added perspective.

TheStreet Ratings, TheStreet’s proprietary ratings tool, projects a stock’s total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a “buy” yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a “buy” yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.

Note: Year-to-date returns are based on June 17, 2015 closing prices. Total cash amounts are as of year end.
GM Chart GM data by YCharts
11. General Motors (GM)
Market Cap: $57.5 billion
Sector: Consumers Goods & Services/Automobile Manufacturers
Total Cash: $28.2 billion
Year-to-date return: 2.6%

General Motors Company designs, builds, and sells cars, crossovers, trucks, and automobile parts worldwide. It operates through GM North America, GM Europe, GM International Operations, GM South America, and GM Financial segments.
TheStreet Ratings said: “We rate GENERAL MOTORS CO (GM) 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 increase in net income, impressive record of earnings per share growth, notable return on equity and largely solid financial position with reasonable debt levels by most measures. We feel its 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:

The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Automobiles industry. The net income increased by 343.7% when compared to the same quarter one year prior, rising from $213.00 million to $945.00 million.
GENERAL MOTORS CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GENERAL MOTORS CO reported lower earnings of $1.64 versus $2.35 in the prior year. This year, the market expects an improvement in earnings ($4.48 versus $1.64).
The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Automobiles industry and the overall market on the basis of return on equity, GENERAL MOTORS CO has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.1%. Since the same quarter one year prior, revenues slightly dropped by 4.5%. The declining revenue has not hurt the company’s bottom line, with increasing earnings per share.
Even though the current debt-to-equity ratio is 1.33, it is still below the industry average, suggesting that this level of debt is acceptable within the Automobiles industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company’s quick ratio of 0.79 is weak.




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