Several high-profile technology and communication services stocks have reported earnings over the past several days--and many of those reports have been stellar. Alphabet GOOG and Facebook FB, for instance, benefited from higher online ad spending during the pandemic. Microsoft MSFT beat expectations thanks in part to stronger gaming-related revenue, while the iPhone segment propelled Apple's AAPL better-than-expected results. However, Netflix's NFLX results weren't as bright: It kicked off the year with lower-than-expected first-quarter subscriber growth.
At Morningstar, we don't give quarterly earnings reports and short-term guidance too much weight. Rather, we focus on a company's long-term sustainable competitive advantages, encapsulated in our Morningstar Economic Moat Ratings. Of course, a company might release information when reporting earnings that will lead an analyst to reassess our long-term expectations. And that may lead to a change in our fair value estimate of a company’s stock.
We boosted the fair value estimates of four of these five popular tech-related giants after digesting their earnings reports and guidance. Here’s what we think they're worth today. A stock trading at the level of a Morningstar Rating of 4 or higher is undervalued according to our metrics, while a stock trading at a 1- or 2-star level is considered overvalued.