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Alphabet (GOOGL) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

Alphabet (GOOGL) closed at $1,206 in the latest trading session, marking a -1.24% move from the prior day. This change lagged the S&P 500's daily loss of 1.23%. Meanwhile, the Dow lost 1.28%, and the Nasdaq, a tech-heavy index, lost 1.13%.

Coming into today, shares of the internet search leader had gained 2.57% in the past month. In that same time, the Computer and Technology sector gained 1.53%, while the S&P 500 gained 1.95%.

Investors will be hoping for strength from GOOGL as it approaches its next earnings release, which is expected to be October 28, 2019. On that day, GOOGL is projected to report earnings of $12.55 per share, which would represent a year-over-year decline of 3.91%. Our most recent consensus estimate is calling for quarterly revenue of $32.83 billion, up 20.88% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $49.61 per share and revenue of $132.54 billion, which would represent changes of +13.52% and +20.39%, respectively, from the prior year.

Any recent changes to analyst estimates for GOOGL should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. GOOGL currently has a Zacks Rank of #3 (Hold).

Digging into valuation, GOOGL currently has a Forward P/E ratio of 24.61. This represents a discount compared to its industry's average Forward P/E of 26.

Meanwhile, GOOGL's PEG ratio is currently 1.41. 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. The Internet - Services industry currently had an average PEG ratio of 2.47 as of yesterday's close.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 164, putting it in the bottom 36% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. 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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