The Valuecruncher team has posted an interesting comparison of Microsoft versus Apple, Google, HP and IBM. They rate MS a buy. What’s also interesting are the implied relative over-valuations of Google and Apple.

EV[Enterprise value]/Revenue shows how a dollar or revenues is being valued by the market against the comparator set. On an EV/Revenue basis $MSFT is trading at 3.2x. This compares to $IBM at 1.7x, $AAPL at 3.5x, $GOOG at 5.5x and $HPQ at 0.9x. $MSFT’s profit margins (at the EBITDA line) are 43.3% of revenues compared to 20.6% and 12.0% for $IBM and $HPQ respectively - so those feel right.  $GOOG has similar margins to $MSFT and significant growth options - but a dollar of $GOOG revenues being worth 70% more than a dollar of $MSFT revenues feels rich. But the standout - to us - is that $AAPL with profit margins half that of $MSFT is valued similarly on an EV/Revenue basis. A dollar of $AAPL revenues is being valued slightly more than a dollar of $MSFT revenues - despite that dollar of revenues producing less than half the profit of the $MSFT revenues.  That is some big growth expectations for $AAPL.

… EV/EBITDA shows how a dollar of profit (measured in as Earnings Before Interest Taxes Depreciation and Amortization) is being valued by the market against the comparator set. On an EV/EBITDA basis $MSFT is trading at 7.4x. This compares to $IBM at 8.2x, $AAPL at 16.5x, $GOOG at 14.8x and $HPQ at 7.4x. Talk about no respect - a dollar of $MSFT EBITDA is worth only slightly more than a dollar of $HPQ EBITDA and less than the other comparators.

While acknowledging that Apple and Google have more exciting stories to tell, the Valuecruncher team is in effect questioning whether the fanboy syndrome may be causing some irrational exuberance in those stocks’ prices.  I’d add that HP and IBM have more diversified and contractually repeating earning streams as well, which should make them safer investments in troubled times.  Maybe the market is betting Goggle and Apple will enjoy bigger share lifts when economies and stock markets recover.

Disclosure: I have investment interests in Microsoft, Apple, Google and ValueCruncher. That’s having a bob four ways.