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Alphabet (GOOGL) Gains As Market Dips: What You Should Know

Zacks Equity Research

Alphabet (GOOGL) closed at $1,153.46 in the latest trading session, marking a +0.26% move from the prior day. The stock outpaced the S&P 500's daily loss of 0.34%. Meanwhile, the Dow lost 0.09%, and the Nasdaq, a tech-heavy index, lost 0.43%.

Coming into today, shares of the internet search leader had gained 5.18% in the past month. In that same time, the Computer and Technology sector gained 6.28%, while the S&P 500 gained 4.46%.

GOOGL will be looking to display strength as it nears its next earnings release, which is expected to be July 25, 2019. On that day, GOOGL is projected to report earnings of $11.48 per share, which would represent a year-over-year decline of 2.3%. Meanwhile, our latest consensus estimate is calling for revenue of $30.90 billion, up 17.76% from the prior-year quarter.

GOOGL's full-year Zacks Consensus Estimates are calling for earnings of $45.59 per share and revenue of $130.18 billion. These results would represent year-over-year changes of +4.32% and +18.25%, respectively.

Investors should also note any recent changes to analyst estimates for GOOGL. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. GOOGL is currently sporting a Zacks Rank of #4 (Sell).

Digging into valuation, GOOGL currently has a Forward P/E ratio of 25.23. This represents a discount compared to its industry's average Forward P/E of 28.77.

We can also see that GOOGL currently has a PEG ratio of 1.44. 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 2.9 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 153, which puts it in the bottom 41% 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.

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


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