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

Zacks Equity Research

In the latest trading session, Alphabet (GOOGL) closed at $1,418.05, marking a +1.49% move from the previous day. The stock lagged the S&P 500's daily gain of 1.54%. Meanwhile, the Dow gained 0.85%, and the Nasdaq, a tech-heavy index, added 1.87%.

Heading into today, shares of the internet search leader had lost 2.63% over the past month, lagging the Computer and Technology sector's gain of 3.97% and the S&P 500's gain of 0.57% in that time.

Wall Street will be looking for positivity from GOOGL as it approaches its next earnings report date. On that day, GOOGL is projected to report earnings of $10.40 per share, which would represent a year-over-year decline of 26.81%. Our most recent consensus estimate is calling for quarterly revenue of $30.42 billion, down 4.07% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $41.23 per share and revenue of $138.08 billion, which would represent changes of -16.13% and +4.79%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for GOOGL. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for 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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.57% lower within the past month. GOOGL is currently a Zacks Rank #3 (Hold).

Valuation is also important, so investors should note that GOOGL has a Forward P/E ratio of 33.88 right now. This valuation marks a premium compared to its industry's average Forward P/E of 30.67.

We can also see that GOOGL currently has a PEG ratio of 2.11. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Internet - Services industry currently had an average PEG ratio of 2.96 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 88, putting it in the top 35% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

To follow GOOGL in the coming trading sessions, be sure to utilize Zacks.com.


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