Samsung Gets Their Price/Earnings Ratio Above Apple's

In terms of investing, a company's price/earnings ratio is an important metric to look at. The way it's calculated is with the price per share and the earnings per share, usually taken as an average over the last four quarters, but sometimes also done with current information. When taking the ratio as a division equation, you're left with a whole number that represents roughly how many dollars an investor can expect to have to put in to get their hands on one dollar of the company's profits. Essentially, the higher that number is, the better a company is doing. As of the second quarter of 2016, Samsung has, for the first time, gotten their price/earnings ratio higher than that of their biggest rival, Apple.

All the way into the tail end of 2013, Apple's ratio trumped Samsung's about twice over. After that, however, riding on the success of their Galaxy lineup that was finally picking up steam, along with a number of ventures outside of the mobile space, Samsung started to pick up the slack and get their ratio up toward their rival's. By 2015, Apple's ratio of 12.43 was watching Samsung come up on it alarmingly fast, sitting pretty at 9.98. Thanks to a sudden huge jump, mostly credited to a $10 billion stock buyback program that eliminated a huge number of shares and drove up the value of each individual share, Samsung's ratio is currently above Apple's. Right now, Samsung's ratio is 13.41, while Apple's is 12.23.

Trends in the price/earnings ratio of both companies have a story to tell; while Samsung has risen over the years, not content to stay the same for too long, Apple has hovered around the same area, the same valuation; one of the most profitable companies in the world, to be sure, but with profit margin growth is a bit on the stagnant side, albeit very high. This can mostly be chalked up to the fact that their product lineup has been mostly free of major changes, aside from the recent iPad Pro, and instead has been rife with retoolings and reincarnations that get about the same profit as their predecessors. Even so, Apple set quite a high bar, and Samsung has made quite the achievement in surpassing them. Given that it was partly due to a stock buyback program, it's hard to say whether the ratio will continue to rise.

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About the Author

Daniel Fuller

Senior Staff Writer
Daniel has been writing for Android Headlines since 2015, and is one of the site's Senior Staff Writers. He's been living the Android life since 2010, and has been interested in technology of all sorts since childhood. His personal, educational and professional backgrounds in computer science, gaming, literature, and music leave him uniquely equipped to handle a wide range of news topics for the site. These include the likes of machine learning, voice assistants, AI technology development, and hot gaming news in the Android world. Contact him at [email protected]
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