Apple's common stock is currently trading at $514 per share. The latest quarterly earnings of Apple showed that the company earned $13.20 per share (i.e., EPS) in Q2, 2020. Most analysts expect this EPS to hold for Apple in 2020. Assume that Google and Facebook, two of Apple's potential competitors in US, are currently trading at P/E ratio (i.e., price/earnings) of 34.90 and 33, respectively. What would you say about the valuation of Google's stock currently relative to Apple and Facebook using only the P/E multiples apparoch?

1.

The P/E multiples approach would suggest that Apple is currently correctly-priced relative to Google and Facebook.

2.

The P/E multiples approach would suggest that Apple is currently undervalued relative to Google and Facebook.

3.

The P/E multiples approach would suggest that Apple is currently undervalued relative to Facebookbut overvalued relative to Google.

4.

The P/E multiples approach would suggest that Apple is currently overvalued relative to Google and Facebook.