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Alphabet (GOOGL) Gains But Lags Market: What You Should Know

Zacks Equity Research
·3 mins read

Alphabet (GOOGL) closed the most recent trading day at $1,458.66, moving +1.36% from the previous trading session. The stock lagged the S&P 500's daily gain of 1.61%. At the same time, the Dow added 1.51%, and the tech-heavy Nasdaq gained 1.87%.

Prior to today's trading, shares of the internet search leader had lost 11.63% over the past month. This has lagged the Computer and Technology sector's loss of 4.69% and the S&P 500's loss of 4.08% in that time.

Wall Street will be looking for positivity from GOOGL as it approaches its next earnings report date. The company is expected to report EPS of $11.35, up 12.15% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $35.19 billion, up 6.6% from the year-ago period.

GOOGL's full-year Zacks Consensus Estimates are calling for earnings of $44.84 per share and revenue of $142.21 billion. These results would represent year-over-year changes of -8.79% and +7.93%, respectively.

It is also important to note the recent changes to analyst estimates for GOOGL. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about 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 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 has moved 0.16% lower. GOOGL is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note GOOGL's current valuation metrics, including its Forward P/E ratio of 32.09. For comparison, its industry has an average Forward P/E of 37.29, which means GOOGL is trading at a discount to the group.

Investors should also note that GOOGL has a PEG ratio of 1.97 right now. 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 was holding an average PEG ratio of 1.99 at yesterday's closing price.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 182, which puts it in the bottom 29% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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