This question originally appeared on Quora: Why is Apple valued more than Google?
Answer by Thang Duong on Quora
Here's a list of reasons why:
- Revenue: GOOG - 68B, AAPL - 212B
- Income: GOOG - 13.9B, AAPL - 47.8B
- Quarterly earnings growth: GOOG - 3.9%, AAPL - 32.7% (year-over-year from recent quarters. To be fair, the large number from Apple reflects a sharp increase from new product releases. In this case, it's the iPhone6. What happens with Apple Watch is yet to be seen)
- Cash on hand: GOOG - 64.6B, AAPL - ~200B (as of April)
- PE: GOOG - 25.5 , AAPL - 16.5
- Operating margin: GOOG - 25.36%, AAPL - 30.15%
So Apple has more money (cash), makes more money (earnings), grows faster (earnings growth), and is more efficient (operating margin) than Google.
The last bit about operating margin is the amazing part. A substantial portion of Apple's income is from selling hardware, which is traditionally a low margin business. Service and software, Google's core businesses, typically have higher margin. Somehow Apple manages to beat Google in operating margin! This just shows that Apple is an extremely efficient company (compared to Google).
Basically, Apple is one lean cash machine!
Apple makes over 3x more money than Google. However, Apple's market cap is only 2x more.
Just from this data, one may wonder: why is Apple not valued more than it already is compared to Google?
And here's why: Apple's stock is steadily increasing. Google's stock has been flat since early 2014, so it may very well be that in a year, Apple will be valued even more than it is now (compared to Google):
And also, no, I am not an Apple fan boy (or girl, I am not a girl, so that may be given). Promise. The only Apple products I have are for development purposes (i.e. I need them to make $ to pay the bills).
Why is Apple valued more than Google?: originally appeared on Quora: The best answer to any question. Ask a question, get a great answer. Learn from experts and access insider knowledge. You can follow Quora on Twitter, Facebook, and Google+. More questions:
