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Category: Stock Market and Alphabet
Date: 29 October 2019 Stock Price: $1288.98 We take a look at the 3rd quarter earnings report of their 2019 fiscal year of Alphabet the parent company of Google the world's best known search engine.
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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
Financial overview of Alphabet's latest earnings report
The data below refers to the latest quarter's data unless specified otherwise:
- Revenue: $40.499 billion (up from $33.740billion for the same quarter of the previous year)
- Total costs and expenses: $31.322 billion (up from $25.115 billion for the same quarter of the previous year)
- Net income: $7.068 billion (up from $9.192 billion for the same quarter of the previous year)
- Diluted earnings per share: $10.12 (down from $13.06 for the same quarter of the previous year)
- Diluted number of shares outstanding: 690.906 million
- Cash and cash equivalents :$16.701 billion
- Cash and cash equivalents per share: $24.17
- Cash and cash equivalents makes up 1.87% of the group's market capital
- Cash and cash equivalents makes up 7.17% of the group's total assets
- Accounts receivable: $20.838 billion
- Accounts receivable makes up 8.95% of total assets
- Goodwill of Alphabet: $17.888 billion
- Goodwill per share: $25.9
- Goodwill makes up 7.68% of Alphabet's total assets
- Stockholders equity in Alphabet: 177.628 billion
- Stockholders equity per share: $257.1
- So Alphabet is trading at 5.1 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
- Cash generated from operations: $15.466 billion
- Cash generated from operations per share: $22.38
Alphabet's management commentary on the results
MOUNTAIN VIEW, Calif. – October 28, 2019 – Alphabet Inc. (NASDAQ: GOOG, GOOGL) today announced financial results for the quarter ended September 30, 2019. “I am extremely pleased with the progress we made across the board in the third quarter, from our recent advancements in search and quantum computing to our strong revenue growth driven by mobile search, YouTube and Cloud,” said Sundar Pichai, Chief Executive Officer of Google. “We’re focused on providing the most helpful services to our users and partners, and we see many opportunities ahead.”
“Our businesses delivered another quarter of strong performance, with revenues of $40.5 billion, up 20% versus the third quarter of 2018 and up 22% on a constant currency basis,” said Ruth Porat, Chief Financial Officer of Alphabet and Google. “We continue to invest thoughtfully in talent and infrastructure to support our growth, particularly in newer areas like Cloud and machine learning.”
“Our businesses delivered another quarter of strong performance, with revenues of $40.5 billion, up 20% versus the third quarter of 2018 and up 22% on a constant currency basis,” said Ruth Porat, Chief Financial Officer of Alphabet and Google. “We continue to invest thoughtfully in talent and infrastructure to support our growth, particularly in newer areas like Cloud and machine learning.”
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 good old time for Alphabet stock holders over the last 5 years, with the stock trading around the $570 a share 5 years ago, and trading at $1288.98 right now, 5 years later. That is return of 126.1% provided to Alphabet stockholders over the past 5 years.
The stock of Alphabet is trading at a lot closer to its 52 week high of $1299.24 than it is to its 52 week low of $977.66 which to us is a clear indication that the sentiment and momentum of Alphabet is positive at this point in time.
The stock of Alphabet is trading at a lot closer to its 52 week high of $1299.24 than it is to its 52 week low of $977.66 which to us is a clear indication that the sentiment and momentum of Alphabet is positive at this point in time.
Recent coverage of Alphabet
The extract below covers the latest earnings report of Alphabet as obtained from TheStreet.com
Shares of Alphabet (GOOGL - Get Report) were falling Monday after the search giant beat on revenue expectations but missed on earnings per share. e stock was falling 1.8% to $1,289 a share in postmarket trading, after having risen 1.95% in regular hours. GAAP earnings per share came in at $10.12, missing Wall Street estimates of $12.32. EPS grew 18% year-over-year. Revenue was $40.5 billion, beating analysts estimates of $40.307 billion and growing 20% year-over-year. Google's operating margin was 23%, lower than last year's third quarter margin of 26% and lower than analyst's expectation of 23.4%.
Google's advertising revenue grew 17% to $33.9 billion. Cost-per-click grew 3% year-over-year, against last year's third quarter growth rate of negative 2%. "I am extremely pleased with the progress we made across the board in the third quarter, from our recent advancements in search and quantum computing to our strong revenue growth driven by mobile search, YouTube and Cloud," said Sundar Pichai, CEO of Google, in a press release
Read the full article here
Shares of Alphabet (GOOGL - Get Report) were falling Monday after the search giant beat on revenue expectations but missed on earnings per share. e stock was falling 1.8% to $1,289 a share in postmarket trading, after having risen 1.95% in regular hours. GAAP earnings per share came in at $10.12, missing Wall Street estimates of $12.32. EPS grew 18% year-over-year. Revenue was $40.5 billion, beating analysts estimates of $40.307 billion and growing 20% year-over-year. Google's operating margin was 23%, lower than last year's third quarter margin of 26% and lower than analyst's expectation of 23.4%.
Google's advertising revenue grew 17% to $33.9 billion. Cost-per-click grew 3% year-over-year, against last year's third quarter growth rate of negative 2%. "I am extremely pleased with the progress we made across the board in the third quarter, from our recent advancements in search and quantum computing to our strong revenue growth driven by mobile search, YouTube and Cloud," said Sundar Pichai, CEO of Google, in a press release
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 $1198.70 a Alphabet bet stock. We therefore believe the stock of Alphabet is overvalued
We usually recommend that long term fundamental or value investors look to enter Alphabet at a price about 10% below our target price, which in this case is $1198.70, so we would suggest getting in at around $1078.70 a share for long term investors looking for value.
We usually recommend that long term fundamental or value investors look to enter Alphabet at a price about 10% below our target price, which in this case is $1198.70, so we would suggest getting in at around $1078.70 a share for long term investors looking for value.
Next earnings release of Alphabet
It is expected that Alphabet's 4th quarter and full fiscal 2019 earnings report will be released in late January 2020