On Friday, several major technology companies like Apple Inc. (AAPL, Financial), Facebook Inc. (FB, Financial), Microsoft Corp. (MSFT, Financial), Twitter Inc. (TWTR, Financial) and Alphabet Inc. (GOOGL, Financial)(GOOG, Financial) remain overvalued going into November according to the GF Value Line, a GuruFocus-exclusive way to measure a stock's intrinsic value.
The GF Value extends Peter Lynch's earnings line concept by considering three key factors: historical price multiples, an internal adjustment for past returns and future estimates of earnings growth. Based on the comparison between a company's stock price and intrinsic value, GuruFocus labels a stock from significantly undervalued to significantly overvalued. Also, if a significantly undervalued stock has poor financial strength and profitability, it could be a potential value trap.
Apple
Shares of Apple traded around $108.48, down over 5% from Thursday's close of $115.32 on the heels of reporting September-quarter iPhone sales decline of 16% year over year and forgoing December-quarter guidance. Despite this, the stock remains significantly overvalued based on its price-to-GF Value ratio of 1.72.
GuruFocus ranks the Cupertino, California-based consumer electronics giant's valuation 1 out of 10 on several warning signs, which include price-book and price-sales ratios near 10 year highs and underperforming over 90% of global competitors.
Gurus unfazed by Apple's high valuations include Warren Buffett (Trades, Portfolio)'s Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial), Ken Fisher (Trades, Portfolio)'s Fisher Asset Management and Spiros Segalas (Trades, Portfolio)' Harbor Capital Appreciation Fund.
Shares of Facebook traded around $263.78, down over 6% from the previous close of $280.83. The stock is slightly overvalued based on a price-to-GF Value ratio of 1.03.
According to GuruFocus, the Menlo Park, California-based price-book and price-sales ratios underperform over 72% of global competitors, with the price-sale ratio near a two-year high.
Gurus with large holdings in Facebook include Chase Coleman (Trades, Portfolio)'s Tiger Global Management and Pioneer Investments (Trades, Portfolio).
Microsoft
Shares of Microsoft traded around $200.44, down over 2% from the previous close of $204.72. The stock is modestly overvalued based on its price-to-GF Value ratio of 1.28.
GuruFocus ranks the Redmond, Washington-based software giant's valuation 1 out of 10 on several warning signs, which include price-book and price-sales ratios near 10-year highs and that underperform over 81% of global competitors.
Shares of Twitter traded around $41.20, down over 21% from the previous close of $52.45 on the heels of reporting weaker-than-expected user growth during the third quarter. Despite this, the stock remains modestly overvalued with a price-to-GF Value ratio of 1.16.
According to GuruFocus, the San Francisco-based social media giant's price-sales ratio of 9.77 is near a five-year high and underperforms 79.73% of global competitors.
Alphabet
Google parent Alphabet bucked the overall trend, with Class A shares trading around $1,610.29, up over 3% from the previous close of $1,556.88, and Class C shares trading around $1,611.01, up over 2% from the previous close of $1,567.24. Both share classes are modestly overvalued based on a price-to-GF Value ratio of around 1.10.
GuruFocus ranks the Mountain View, California-based interactive media giant's valuation 2 out of 10 on several warning signs, including a price-book ratio near a 10-year high and a price-sales ratio that underperforms over 64% of global competitors.
Disclosure: Long Apple.
Read more here:
- 6 Popular Stocks in GuruFocus Users' Candy Baskets
- Warren Buffett's Apple Spooks on 4th-Quarter iPhone Sales Decline
- 3 Undervalued Tech Stocks With High Financial Strength
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