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disolitude on 21 January 2012
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ebw said:
disolitude said:
Man, looking at this Microsoft is seriously undervalued right now compared to some of its peers on a P/E or FCF basis...


I don't agree Microsoft is undervalued.  Its P/E of 10 is about on par with other slow-growth stocks like Exxon.  Their core business of Windows sales is stagnating (Windows licensing has fallen short of expectations for the last year or so).

Apple's price is high but is still undervalued: its P/E has been stuck at 15 even though it continues to grow at a ridiculously fast rate.  Compare that to Amazon's P/E of 100.


What you just said doesn't support your argument that microsoft isn't undervalued and Apple is.

Its true that microsofts price to earnings ratio is about 10, and Apples was 15, but the lower that number the better the stock. Microsofts stock returned 1/3 more value per stock than Apples...hence it is undervalued. Both companies are somewhat undervalued, but Microsoft more so than Apple.

Also, your statement of their core business stagnating...check out Microsofts latest earnings. Windows is down only 6% and this is 3 years in to Windows 7 and just before Windows 8 launch which only has marketshare to gain as Windows 7 pretty much remains unchallenged in the desktop world. Besides, Microsoft revenue is fairly evenly divided amongst all divisions and Windows division is now actually 3rd in overall revenue.