Samsung's strong performance in the second quarter of this year has renewed investor confidence in the company. Its share price is surging to new record highs aided by its $10 billion stock buyback and for the first time ever, Samsung's P/E ratio or price-to-earnings ratio has crossed that of its rival Apple. P/E ratio is a way of looking at a company's value by measuring its current share price relative to its earnings per share. It reflects the dollar amount that an investor can expect to invest in a company so as to receive one dollar of that company's earnings.
Samsung's shares are trading at a P/E ratio of 13.41 on the local exchange today while Apple's P/E ratio remains at about 12.23. The widest gap between the two companies' P/E ratio was witnessed back in 2013 when Apple's P/E ratio was 12.14, almost double that of Samsung's 6.93. The gap has been coming down since then and now Samsung has finally crossed its rival.
Disclaimer: This is not a call on Samsung stock and should not be taken as one, it is merely a commentary on its P/E ratio.
