| Apple Inc has a substantially higher fundamental rating then Alphabet Inc which has an impact on the head-to-head comparison. The CML Star Rating is an objective, quantifiable measure of a company's operating and financial condition.
The rating is computed by measuring numerous elements of the company's current financial data and their associated changes over time.
Now, let's dive into the two companies to compare them.
➤ Income Statement
First we turn to the income statement and compare revenue, earnings and revenue per employee for both companies. We note that simple revenue comparisons do not impact the rating.
↪ Apple Inc has substantially higher revenue in the last year than Alphabet Inc. Raw revenue comps do not affect the head to head rating.
↪ Both AAPL and GOOGL show positive earnings over the last year with the edge to AAPL.
↪ AAPL generates notably larger revenue per employee ($1.9 million) than GOOGL ($1.4 million).
Next we create some derived metrics to compare the the amount of revenue earned per dollar of expense and the amount of free cash flow earned per dollar of revenue. Margins are one of the fairest ways to compare companies since they remove some of the bias of large versus small numbers.
↪ Apple Inc generates $1.35 in revenue for every $1 of expense, very similar to Alphabet Inc's $1.29.
↪ AAPL generates $0.20 in levered free cash flow for every $1 of revenue, substantially higher than GOOGL's $0.11.
Finally we compare the financial metrics related to growth: revenue growth rates and price to sales.
↪ Both companies are growing revenue. Alphabet Inc is growing revenue much faster than Apple Inc.
↪ For every $1 in revenue, the stock market prices in $3.44 in market cap for AAPL and $6.24 in market cap for GOOGL.