Apple's growth vs. top ten largest tech companies
by Horace Dediu
In the last article I described growth vs. P/E and price change for the largest "ultra-large cap" companies, of which Apple features prominent.
In this article I take the same analysis to the top ten largest technology companies (by market cap, see table at bottom).
In this comparison, Apple no longer has the largest P/E ratio. Qualcomm, Google and Oracle are all at similar levels of valuation relative to earnings, however Apple's growth outstrips them, only with Google in the same quadrant.
Note the "Wintel" cohort consisting of Intel, Microsoft, HP clustered around the Low growth, low valuation quadrant in the lower left (coincidentally co-located with IBM). Oracle, Qualcomm and Siemens show high valuation with low long-term EPS growth. Cisco is somewhat on the fence.
When comparing how the market has rewarded growth through share price appreciation, the correlation to growth is much better. Google seems under-rewarded.
Data follows:
10 comments
vangrieg ·
With regard to Google, it's also interesting that since 2008 its stock price changed exactly like Microsoft. The curves were indistinguishable last time I checked. So the 5 year data is somewhat deceptive here.
Pat Smellie ·
Was wondering why you didn't include Samsung Electronics. They are the largest electronics company based on sales. They have a market cap of 147.3M shares outstanding X 755,000 ($655.08) = 96.49B Market Cap
http://investing.businessweek.com/research/stocks...
Tom ·
Horace is comparing the the top 10 tech companies which trade on US stock exchanges. Samsung trades on the Korean stock exchange.
Gandhi ·
I am not so sure Google is under-rewarded. Unless there is better clarity on Android and what it means to the bottom line to Google, the market will continue to "under-reward" GOOG
JonathanU ·
Not to mention how Google uses its cash hoard to buy numerous companies which may or may not pan out to be worth anything. Discounting Google's cash on its balance sheet could also be blamed for the stock being 'under-rewarded'.
Horace Dediu ·
Some non-US companies are in the index. The ones that are are traded using ADRs.
Tom ·
Does Samsung have an ADR, so it could be included?
Horace Dediu ·
I don't believe it does. I tried to find it on finance.google.com but could not. My data for the charts comes entirely from google. They do sometimes make mistakes.
Tantrum ·
This tells me buying HP stock is a no brainer.
Horace Dediu ·
In the old days P/E used to be roughly equal to Growth (PEG). That meant that if you drew a line from 0,0 to 25,25 on the P/E vs. Growth curve anything above it would be a buy and anything below it would be a sell.