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Alphabet (GOOGL) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
·3-min read

Alphabet (GOOGL) closed at $1,503.60 in the latest trading session, marking a +0.92% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.78%. Elsewhere, the Dow gained 0.68%, while the tech-heavy Nasdaq added 1.44%.

Heading into today, shares of the internet search leader had gained 2.61% over the past month, lagging the Computer and Technology sector's gain of 4.97% and outpacing the S&P 500's loss of 1.32% in that time.

Wall Street will be looking for positivity from GOOGL as it approaches its next earnings report date. In that report, analysts expect GOOGL to post earnings of $8.18 per share. This would mark a year-over-year decline of 42.43%. Our most recent consensus estimate is calling for quarterly revenue of $30.42 billion, down 4.07% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $41.23 per share and revenue of $138.15 billion. These totals would mark changes of -16.13% and +4.84%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for GOOGL. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.57% lower. GOOGL is currently a Zacks Rank #4 (Sell).

Digging into valuation, GOOGL currently has a Forward P/E ratio of 36.13. This represents a premium compared to its industry's average Forward P/E of 34.75.

It is also worth noting that GOOGL currently has a PEG ratio of 2.25. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. GOOGL's industry had an average PEG ratio of 2.81 as of yesterday's close.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 85, which puts it in the top 34% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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Zacks Investment Research