How Does Apple Compare to Its Peers on Valuation?



Berkshire Hathaway’s view of Apple

While investors are focusing on Apple’s poor quarterly results and billionaire investors who have reduced their holdings in the company, Berkshire Hathaway (BRK) has taken a new position in Apple (AAPL) and suggested that investors should focus on value investment strategies.

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Valuations of technology stocks

BRK has also increased its holdings in IBM, indicating that its investment in the technology sector (XLK) (VOO) is increasing. The PE (price-to-earnings) ratios of Apple and IBM are 10.5x and 11.3x, respectively. The PE ratios of Amazon (AMZN) and Expedia (EXPE) are 292.9x and 26.1x, respectively. Among these stocks, the valuations of Apple and IBM are looking attractive compared to those of Amazon and Expedia.

Performances of technology stocks

Now we’ll look at the price movements of Apple, IBM, Amazon, and Expedia. Apple has fallen 13.7% since April 1, 2016, as of May 16. IBM has fallen 2%, but Amazon and Expedia have risen 18.7% and 3.7%, respectively.

David Einhorn, president of Greenlight Capital, is also bullish on Apple. He thinks that there’s tremendous value in the company. Apple’s growing global customer base and increasing focus on service could drive the company’s growth. Apple is one of the top holdings of Greenlight Capital.

You may be interested in reading Apple Can’t Ignore the Fourth Industrial Revolution.


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