Either Microsoft’s Bill Gates development of Windows or Apple’s Steve Jobs computer innovations, we now somewhat have a brief idea on their history. However, it is more important to estimate their future to understand each company’s stand on market.
Assessment:
Apple Inc.
52 Week Range: 78- 194.67
Price-Earnings Ratio: 33
Forward to Price-Earnings Ratio: 26.71
Price/Sales Ratio: 5
Price/book Ratio: 6.6
Dividend yield: 0
Return
on equity (TTM): 22.7
Projected EPS growth: 18.02%
Price/Earnings to Growth ratio:
1.8
New Products: MAC OS 10, I Phone 3gs
Microsoft Corp.
52 Week Range: 14.87-29.85
Price-Earnings Ratio: 16.5
Forward to Price-Earnings Ratio: 13.9
Price/Sales Ratio: 4.1
Price/book Ratio: 6.0
Dividend yield: 1.97
Return
on equity (TTM): 38.4
Projected EPS growth for 5 years: 10.17%
Price/Earnings to Growth ratio:
1.56
New Products: Windows 7, Bing,
Retail Stores
Based on assessment ratios,
Microsoft is a good investment if one was to focus on a value stock. However, Microsoft’s
stock price has not matched the success and high ROE of 38.4 that the company provided
for share holders. Although the next quarter might get brighter once Windows 7,
Bing and the retail stores are thoroughly widespread, it is very hard to ignore
the roaring success of Apple Inc.
In June, the Mac revenue market share in
the premium price segment was 91 percent, up from 88 percent in May (Source: New
Product Development). This is a positive sign for investors to consider Apple
stocks. Moreover, Robert Cihra of Caris & Company predicts that Mac market
share will grow by 26 percent in 2010, compared to only a 16 percent expansion
in the general computing industry.
AppleInsider
reported that Mac sales are likely to grow because of things like pricing and product
line control. Apple controls its own product cycles, as well as pricing which helped
it outpace the PC market as a whole by 1.8 times over the last 12 quarters.
Overall, there are
multiple reasons that Apple will continue to be the best stock choice for
investors. Even though Apple only earned a Mac [average selling price] of
$1,289 in year 2009, down 10%, yet the company still represents a premium of
1.8 times versus its Wintel peers. Also, estimations
say that Apple Macs will generate a gross profit-per-unit of nearly $340, which
is 2-3 times the estimate for its competitors. Then again, there are obviously a lot of people who are
hungry for even better and technology and service. Looking for the next product mix to excite
them! Thus, the future could be very
unpredictable just like the consumer spending behavior.
