Alphabet (NASDAQ:GOOGL) earnings release for the 1st quarter of their 2020 fiscal year
Category: Stock Market and Alphabet
Date: 29 April 2020 Stock Price: $1232.59 We take a look at the 1st quarter earnings report of their 2020 fiscal year of Alphabet the parent company of Google the world's best known search engine and Youtube, the world's biggest video streaming service. Youtube having a bumper of a time with lockdowns being imposed across the world due to Coronavirus
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About Alphabet
Alphabet Inc. is an American multinational conglomerate headquartered in Mountain View, California. It was created through a corporate restructuring of Google on October 2, 2015, and became the parent company of Google and several former Google subsidiaries. Wikipedia
Overview of Alphabet's 1st quarter 2020 earnings report
The data below refers to the latest quarter's data unless specified otherwise:
- Revenue: $41.159 billion (up from $36.339 billion for the same quarter of the previous year)
- Revenues increased by 13.2% over the last 12 months
- Total costs and expenses: $33.182 billion (up from $29.731 billion for the same quarter of the previous year)
- Total costs and expenses increased by 11.6% over the last 12 months
- Some margin gain for Alphabet with its costs and expenses growing at a rate slower than their revenues
- Net income: $6.836 billion (up from $6.657 billion for the same quarter of the previous year)
- Diluted earnings per share: $9.87 (upfrom $9.50 for the same quarter of the previous year)
- Diluted number of shares outstanding: 692.267 million (down from 700.879 million for the same quarter of the previous year)
- Cash and cash equivalents :$19.644 billion
- Cash and cash equivalents per share: $28.02
- Cash and cash equivalents makes up 2.27% of the group's market capital
- Cash and cash equivalents makes up 7.4% of the group's total assets
- Accounts receivable: $21.825 billion
- Accounts receivable makes up 7.9% of total assets
- Goodwill of Alphabet: $20.734 billion
- Goodwill per share: $29.56
- Goodwill makes up 2.4% of Alphabet's market capital
- Goodwill makes up 7.6% of Alphabet's total assets
- Stockholders equity in Alphabet: 203.659 billion
- Stockholders equity per share: $289.63
- So Alphabet is trading at 426. times its stockholders equity per share which is outside the expected range of between 2 and 4 times that most firms tend to trade at
- For perspective the average price to book value of firms in the S&P 500 is 3.34. Read more about the S&P500 here
- Cash generated from operations: $11.45 billion
- Cash generated from operations per share: $16.34
Alphabet's management commentary on their 1st quarter 2020 earnings report
MOUNTAIN VIEW, Calif. – April 28, 2020 – Alphabet Inc. (NASDAQ: GOOG, GOOGL) today announced financial results for the quarter ended March 31, 2020. “Given the depth of the challenges so many are facing, it’s a huge privilege to be able to help at this time,” said Sundar Pichai, Chief Executive Officer of Alphabet and Google. “People are relying on Google’s services more than ever and we’ve marshalled our resources and product development in this urgent moment.”
“Our business, led by Search, YouTube, and Cloud, drove Alphabet revenues to $41.2 billion, up 13% versus last year, or 15% on a constant currency basis,” said Ruth Porat, Chief Financial Officer of Alphabet and Google. “Performance was strong during the first two months of the quarter, but then in March we experienced a significant slowdown in ad revenues. We are sharpening our focus on executing more efficiently, while continuing to invest in our long-term opportunities.”
Alphabet (NASDAQ: GOOGL) stock price history
The image below, obtained from Google shows the stock price history of Alphabet over the last 5 years. And its been a very good time for Alphabet stock holders over the last 5 years, with the stock trading around $551, five years ago and its currently trading at $1232.59. That is a very strong return of 123.7% provided to Alphabet stockholders over the past 5 years.
The stock of Alphabet is trading at close to the midpoint between its 52 week high and 52 week low which to us shows that the sentiment and momentum of GOOGL stock price is neutral at this point in time.
The stock of Alphabet is trading at close to the midpoint between its 52 week high and 52 week low which to us shows that the sentiment and momentum of GOOGL stock price is neutral at this point in time.
Recent Google searches for Alphabet stock price and GOOGL stock price
The graphic below shows the trend in searches for alphabet stock price and GOOGL stock price over the last 12 months. And while searches for Alphabet stock price is far more popular than that of GOOGL stock price both saw an uptick in searches towards the middle and end of March 2020 as the global stock market sell off sparked by the impact of Coronavirus on global economic growth started hitting stock prices hard.
Recent coverage of Alphabet
The extract below covers the latest earnings report of Alphabet as obtained from TheStreet.com
Alphabet (GOOGL) shares rose after earnings, after the search giant posted better-than-expected revenue, even while acknowledging advertising revenue began dropping off due to coronavirus. The stock rose 3.54% to $1,276 in after hours trading. The stock, after enjoying a solid run-up since April 9, had lost some in the past few days and fell 3% Tuesday in regular trading hours. This was after some analysts flagged what they viewed to be overly optimistic views on advertising spend in the wake of the epidemic, as brands spend on marketing less because of lower revenues.
Read the full article here
Alphabet (GOOGL) shares rose after earnings, after the search giant posted better-than-expected revenue, even while acknowledging advertising revenue began dropping off due to coronavirus. The stock rose 3.54% to $1,276 in after hours trading. The stock, after enjoying a solid run-up since April 9, had lost some in the past few days and fell 3% Tuesday in regular trading hours. This was after some analysts flagged what they viewed to be overly optimistic views on advertising spend in the wake of the epidemic, as brands spend on marketing less because of lower revenues.
Read the full article here
Alphabet (NASDAQ: GOOGL) latest stock valuation
So what do we value Alphabet at based on their latest earnings report, their earnings per share, cash generated from their operations and the group's future prospects. Based on Alphabet's latest earnings report our valuation model provides a target (full value) price at $1181.20 a Alphabet stock (up slightly from our 4th quarter 2019 earnings report valuation of Alphabet). We therefore believe the stock of Alphabet is overvalued
We usually recommend that long term fundamental or value investors look to enter a stock at at least 10% below our target price, which in this case is $1181.20 so we would suggest looking to buy Alphabet at around $1063 a stock.
Since the stock of Alphabet is trading at well above our suggested entry point into the stock we rate the stock of Alphabet as a sell
We usually recommend that long term fundamental or value investors look to enter a stock at at least 10% below our target price, which in this case is $1181.20 so we would suggest looking to buy Alphabet at around $1063 a stock.
Since the stock of Alphabet is trading at well above our suggested entry point into the stock we rate the stock of Alphabet as a sell
Next earnings release of Alphabet
It is expected that Alphabet's 2nd quarter 2020 fiscal year earnings report will be released towards the end of July 2020