Every year Fast Company lists the 20 most innovative companies and Apple Inc. (NASDAQ:AAPL) was outranked by several publicly traded companies: NIKE, Inc. (NYSE:NKE) at number one, Amazon.com, Inc. (NASDAQ:AMZN) at two, Splunk Inc (NASDAQ:SPLK) at four, Target Corporation (NYSE:TGT) at ten and Google Inc (NASDAQ:GOOG) at 11 with Apple Inc. (NASDAQ:AAPL) trailing at 13.
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Mired in the doldrums?
Each of these companies’ stocks has performed better than Apple Inc. (NASDAQ:AAPL) and in these doldrums that Apple has been sailing in seemingly forever, one has to wonder if their North Star truly was Steve Jobs.
With few tailwinds and plenty of headwinds how much longer before Apple shareholders and activist investors mutiny? How much longer will they grumble below decks, “When is Apple Inc. (NASDAQ:AAPL)’s “Next Big Thing” coming out?”
I’ve been an Apple fangirl for some time, but where is the Apple TV, the one that is supposed to change the way we watch TV forever, I ask you? The iWatch? Both are under construction but unlike a real construction site, there’s no window to watch men at work. Of course, that’s part of Apple Inc. (NASDAQ:AAPL)’s secretive nature.
From patent applications and hiring of haute couture names we know the iWatch is underway but have no clue to a timeframe. There have even been rumored problems of employees trying to jump ship according to the Financial Times including a senior worker on the iWatch.
The Fast Company inclusion of Apple was for its iPad retina display, nice but not disruptive. The share price will probably tread water as more innovative companies’ share prices soar.
Should you sail along with Splunk?
Splunk Inc (NASDAQ:SPLK) has been reporting losses with 2014 Q1 non-GAAP loss of $0.06 per share and the forward P/E at 422.67 is even higher than Amazon.com, Inc. (NASDAQ:AMZN)’s 96.7. The company did raise guidance for FY 2014 revenues but non-GAAP margin is expected to remain at the previously guided range of zero.
This software application company is the correlator/aggregator/translator of eyeballs on the internet, customer complaints, and financial transaction, what is otherwise called “Big Data”, for its customers which have been growing by 20-30% every year. Their industry has favorable headwinds as well with the demand for Big Data expected to grow revenues from $9.7 billion for the industry in 2013 to over $16 billion in just three years.
The company has one particularly formidable competitor in International Business Machines Corp. (NYSE:IBM), a time proven proposition with yield, a trailing P/E of 13.25 and a PEG of only 1.19. However, analysts really like Splunk Inc (NASDAQ:SPLK) with 1 Strong Buy, 13 Buys and 5 Holds even after it surpassed its median price target of $50.00. The short interest is growing which isn’t surprising but it is surprising it’s only 5.40%.
Sailing ahead of their rivals
However, reporting losses or razor-thin margins (1.04%) hasn’t stopped Amazon.com, Inc. (NASDAQ:AMZN) from running 42% higher this last year. I’ve said before Amazon is a “willing suspension of disbelief” stock in that it has yet to make real money and is willing to sacrifice margins for an indeterminate amount of time as it brings customers on board its Prime system to buy anything e-commercial and stream content, hopefully on a Kindle Fire.
Its customer-centric philosophy and Cap’n (CEO) Jeff Bezos has kept the true believers in line as the stock crossed $300 for an all-time high on July 12.There’s almost no other stock that generates this conviction in its future possibilities. Everyone knows one day that they will make money but no one seems to care when.
Amazon.com, Inc. (NASDAQ:AMZN) is a compelling story, the most compelling being why it ranked number two among the most innovative companies… its expedited delivery (with same day shipping in some cities) of their special smiley boxes everyone loves to receive. (See Lindsay Kratchowill’s informative timeline on how Amazon upped the delivery game for everyone, including rivals eBay Inc (NASDAQ:EBAY) and Wal-Mart Stores, Inc. (NYSE:WMT).)
That said, Amazon.com, Inc. (NASDAQ:AMZN) sails from swell to swell each earning season offering a heckuva ride like that in The Perfect Storm. While EPS growth has been -13.58% for the past five years per annum, going forward it is expected to exceed 36%. That easily bests analysts’ predictions for Apple Inc. (NASDAQ:AAPL)’s five year EPS growth at 20.88%.
The Titanic of tech titans?
The last few years Google Inc (NASDAQ:GOOG) was like the Titanic of tech; it could do nothing right. Now it can do nothing wrong with the share price surging 60% and hitting an all-time high of $923.00 on July 12.
Analysts see five year EPS growth at 15.00%, not as good as Apple Inc. (NASDAQ:AAPL), and the PEG at 1.33 is higher than Apple’s .52. Unlike Splunk Inc (NASDAQ:SPLK) and Amazon.com, Inc. (NASDAQ:AMZN), Google has an operating margin of 26% and operating cash flow of $16.56 billion.
Google Inc (NASDAQ:GOOG) keeps powering along the internet seas with its Google Fiber, their best new hope to wire America which they started in Kansas City and the rationale for their Fast Company listing. Frankly, I wish they had it where I live so I could be part of the “fiberhood.”
And this is only among dozens of Google Inc (NASDAQ:GOOG)’s bright ideas and numerous investments in tiny startups and smaller tech companies. Of five important tech trends, Google is involved in three of them including social networking with Google Plus gaining share, mobile wallet, and wearable tech with Google Glass. Google Inc (NASDAQ:GOOG)’s position is number one in search and has dominant position for Android on 69.7% of smartphones globally as of Q4 2012. Apple Inc. (NASDAQ:AAPL)’s iOS was on 20.9% according to Gartner.
Google is trading at a trailing P/E of 27.62 with a forward P/E of 17.32 compared to Apple’s trailing 10.18 and forward 9.80. And yet, Google rises with Apple Inc. (NASDAQ:AAPL) stock price sinking 29.72% in 52 weeks despite Apple’s 2.90% yield and 30.92% operating margin.
Who will you sail with off into the sunset?
Amazon.com, Inc. (NASDAQ:AMZN), Google Inc (NASDAQ:GOOG), and Apple are reporting earnings soon. Long-term investors in Amazon and Google will take any squalls in stride. Apple Inc. (NASDAQ:AAPL), however, will need Captain Tim Cook to signal they are moving in the right direction full speed ahead. Splunk Inc (NASDAQ:SPLK) is a speculative up and comer. Have a life jacket handy.
AnnaLisa Kraft has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG).
The article Has This Tech Titan Lost Its Way? originally appeared on Fool.com.
AnnaLisa is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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