Samsung Electronics Co. has tumbled to the lowest level in two decades versus Apple Inc. (AAPL) amid speculation the iPhone maker will capture more of the market for high-end smartphones.
The CHART OF THE DAY shows the two stocks have diverged since June 3, sending the ratio of Samsung Electronics’ share price over Apple’s to the lowest since 1993. The Korean company has fallen 19 percent, dragging its price-to-book ratio below the benchmark Kospi index’s for the first time in the three years, while Apple surged 13 percent to a record.
Samsung, which is losing market share in China and India to lower-cost domestic producers, may face renewed competition for its top-end Galaxy devices next week as Apple is projected to debut a new lineup of iPhones with bigger screens. The Korean company’s shares will probably fall 3.7 percent in 12 months as profitability in its handset business declines, while Apple shares will gain in the next half-year, Berenberg Bank said.
“What I’ve been saying to investors is long Apple and short Samsung as a trade,” said Adnaan Ahmad, an analyst at Berenberg in London whose recommendations on Samsung Electronics during the past 12 months produced the best return among forecasters tracked by Bloomberg. “The pain is still going to come in terms of the earnings cuts in the next 12-18 months.”
The Suwon, South Korea-based company posted in July the lowest quarterly profit since it became the world’s largest mobile-phone producer in 2012, while Apple boosted net income in the same three months by 12 percent. Apple’s stock has recovered after losing a third of its value in the year after the iPhone 5’s release in 2012 on concerns that the company was running out of hit product ideas without co-founder Steve Jobs.
Apple, based in Cupertino, California, is set to introduce two iPhone models on Sept. 9 with displays of 4.7 inches and 5.5 inches, as well as a new wearable device, which would be the company’s first new product category since the iPad debuted in 2010, according to people familiar with the plans. Samsung released its Galaxy S5 globally in April, a high-end phone with a 5.1-inch screen and will unveil its Note 4 device this week.