Alphabet Stock Analysis, Valuation (NASDAQ:GOOGL)

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$947.55 $0.01 (0%) GOOGL stock closing price Sep 21, 2017 (Closing)
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Alphabet
Updated on : Sep 21, 2017
previous close
GOOGL 947.6 (0%)
NASDAQ 6422.7 (0%)
Closing Price On: Sep 21, 2017
stock rating
RATING: ★★★★★★★★★★ (0/5)
Industry :
Internet Services
Sector :
Computer and Technology
5 Quarter Revenue
Revenue Growth
2017-Q2
$billion
%
YOY GROWTH
Compared to the industry
Operating Profit
Operating Margin:
23.3%
Sector Average:
5.8%
5 Quarter Net Profit
Net Margins
2017-Q2
%
LTM Margin
Compared to the industry
Debt/Equity Ratio
Debt:
3.96B
Debt/Equity Ratio:
 0.03
Compared to the industry
Cash Flow
Operating cash flow:
$7.4B
Net Income:
$3.52B
PROS      CONS
Recent Growth
Operating Margins
Net Margins
Low Debt Burden
Cash Flow
ROIC
PS Valuation
Rating: ★★★★★★★★★★ (0/5)
Relative Valuation
GOOGL PS :
6.7
Industry PS :
2.7
Sector:   Computer and Technology.   *PE adjusted for one time items.
Other Metrics
Return on Invested Capital:
29.5%
Return on Equity:
13.9%
Free Cash Flow Margin:
17.6%
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Alphabet Stock Analysis

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Our Alphabet stock analysis is based on a detailed research of the company, its financials, innovations, and future prospects. Alphabet Inc. is a holding company. The Company holds interests in Google Inc. (Google). Alphabet was created as a subsidiary directly owned by Google Inc. The restructuring process was completed on October 2, 2015. Alphabet stock analysis shows that not only has the firm been at the forefront of innovation, but has been a great value stock as well.

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Alphabet Inc Stock Rating 3.8/5

Our Alphabet stock opinion is based on fundamentals of the company. This Alphabet stock analysis is based on latest 2017 Q2 earnings. The stock price analysis takes into account the company's valuation metrics.

Should you buy GOOGL stock?

  • The Year Over Year (YoY) revenue growth for Alphabet was 21% in 2017 Q2.
  • Alphabet had a healthy average operating margin of 23.3% over the last 4 quarters.
  • Net margins stood at a healthy 19.5% (average) for Alphabet in the Trailing Twelve Months.
  • Alphabet has a lower debt burden than its peers in the Computer and Technology sector, with a debt/equity ratio of  0.03.
  • The operating cash flow looks good at 2.1 times the net income.
  • Alphabet generates a high return on invested capital of 29.5%.
  • The LTM ROE of 13.9% for Alphabet is attractive.
  • Alphabet has a healthy FCF (Free Cash Flow) margin of 17.6%.

Should you sell GOOGL stock?

  • The company is trading at a price to sales multiple of 6.7, which is overvalued in comparison to the Internet Services industry average multiple of 2.7.

Comments on this video and Alphabet stock

Financial analysis of Alphabet along with a look at the company's growth, core business, its new ventures etc. makes one see the value of this tech stock. The company has repeatedly innovated, made strategic acquisitions, and has a huge portfolio of patents. All this and growing Alphabet assets makes us bullish about the stock. The stock has seen a steady rise in price as can be seen from Alphabet stock price history.

Alphabet Inc. (marketed as Alphabet) is an American multinational conglomerate founded on October 2, 2015, by the two founders of Google, Larry Page and Sergey Brin, with Page serving as CEO and Brin as President. It is the parent company of Google, Calico, GV, Google Capital, Verily, X,Google Fiber and several other companies previously owned by them. The Company offers advertising solutions for businesses with a range of products across screens and devices. It delivers performance advertising and brand advertising. Its performance advertising lets its advertisers connect with users. It offers AdWords, which is an auction-based advertising program that helps to create text-based advertisements that appear on Google Websites and the Websites of Google Network Members using its advertising programs to deliver relevant advertisements together with their search results and content. Its performance advertising also includes AdSense program to deliver relevant advertisements. Google Adwords the main source of revenue for the company, with Alphabet revenue. It invested in the future early on by acquiring Android Inc. in 2005 and the video streaming company YouTube in 2006. Both have paid off with YouTube contributing significantly to revenues. To strengthen its ad serving platform, the company brought DoubleClick in 2007, and went on to buy mobile display ad technology provider AdMob in 2009. To supercharge its Android division and enhance competition, the company acquired Motorola Mobility. However, it eventually sold this loss making unit to Lenovo, while keeping the majority of its patents.

The latest innovations include Daydream for Virtual Reality which will involve Daydream-ready smartphones, a VR headset with small handheld controller and Daydream apps, driverless cars which are operated by software called Google Chauffeur, Google Home and Google Assistant that features artificial intelligence and advanced Internet of Things smart home capabilities. The Other Bets segment is engaged in the sale of Nest hardware products, Internet and television services through Google Fiber, and licensing and research and development (R&D) services through Verily. Google offers products, including Gmail, which is an e-mail service; Chrome, which is a browser, and Google Play, which allows access to movies, books, music and application on various devices. Google offers platforms, including Chrome OS and Android mobile operating system.

With our Alphabet market analysis, we compare Alphabet valuations with its industry peers like Yahoo, Facebook and Microsoft. Alphabet ratio analysis involves PE ratio (see Alphabet PE ratio chart), PS ratio comparison with industry peers.

References:

Alphabet News and Events

List of acquisitions by Google, Wikipedia