How NetApp Stock Is Engineered To Make Money For You
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Shares of NetApp (NTAP) fell 17.9% in the month to November 2, 2026, while the S&P 500 lost 2.3%. The case for owning the shares is slower and steadier than that move. NetApp has reduced its diluted share count every year for three years, by 7.4% in all, leaving each remaining share with a larger slice of the business. How much has that added to what each share earns?
NetApp Has Grown Earnings Per Share Faster Than Profit
NetApp expanded its diluted earnings per share by 8.6% a year between the twelve months to July 2023 and the twelve months to July 2026. Over the same period, its net income grew 5.5% a year. The smaller share count provided most of that 3.2 percentage point annual gap, as the company divided each year’s profit among fewer shares. Both rates start from a year when net income of $1.21 billion ran above operating income of $1.09 billion; operating income has since grown about 21% a year, to $1.92 billion.
While an investor’s share count stays flat, the portion of NetApp’s earnings attached to each share grows. The value of that slice still rests on the share price, which moves with business growth and with how much investors will pay for each dollar of those earnings. The company continues to repurchase stock, spending $850 million on buybacks over the twelve months to July 31, 2026. After accounting for stock paid to employees, that net spending represented 1.2% of NetApp’s market value on November 2.
NetApp Earns More Cash Than It Returns To Shareholders
Over the twelve months to July 31, 2026, NetApp generated $1.65 billion of free cash flow, compared with the $1.26 billion it spent on buybacks and dividends. That left about $390 million after paying shareholders, meaning NetApp funded the buyback and dividend over those twelve months out of the cash the business earned.
The Hybrid Cloud unit, which handles NetApp’s products, support and professional services, produced $6.24 billion of revenue in fiscal 2026. The Public Cloud segment brought in $688 million. NetApp as a whole has also grown more profitable. The company posted a 26.0% operating margin over the latest twelve months, compared with 21.8% a year earlier. Capital spending consumed only 13.0% of the cash from operations, leaving most of what the business brings in for shareholders.
Can NetApp Keep Buying Back Shares At This Pace?
Based on its latest figures, NetApp can. On July 31, 2026, the company held $1.04 billion more in cash and short-term investments than debt, and its operating income covered interest expense 17.7 times over the past twelve months. On September 2, management raised its fiscal 2027 revenue forecast to an $8.1 billion midpoint, up from $7.45 billion in May.
The open question is how much of the recent growth will last. Management said revenue rose 30% in fiscal Q1 2027, helped by some accelerated purchase decisions and pricing benefits, and that the quarter included an extra week. While management declined to specify the size of that early buying, they noted that very few customers have the financial flexibility to purchase ahead.
NetApp funds its buybacks from what the business earns, not from debt. Free cash flow measured against spending on buybacks and dividends is the number to watch when the company reports its fiscal Q2 2027 results, expected in December 2026.
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