Valuation of Hardware and Software Stocks

Abstract

Valuing technology companies is, without a doubt, challenging, but by looking at major trends in the markets, considering product and inventory cycles, and conducting microanalyses, investors can get a handle on a company's valuation. Traditional fundamental analysis, including measuring prices as multiples of earnings, revenue, and book value, is also helpful. And as prices rise beyond traditional limits, comparing technology companies with leading companies in other industries helps determine whether a stock is overvalued.