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Alphabet (GOOGL) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
Steel Dynamics (STLD) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Alphabet (GOOGL) closed at $1,270.59 in the latest trading session, marking a +1.34% move from the prior day. This change outpaced the S&P 500's 0.88% gain on the day. Meanwhile, the Dow gained 0.55%, and the Nasdaq, a tech-heavy index, added 1.32%.

Prior to today's trading, shares of the internet search leader had gained 4.71% over the past month. This has lagged the Computer and Technology sector's gain of 5% and outpaced the S&P 500's gain of 3.96% in that time.

Wall Street will be looking for positivity from GOOGL as it approaches its next earnings report date. This is expected to be April 29, 2019. The company is expected to report EPS of $10.37, up 4.43% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $29.98 billion, up 20.59% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $47.31 per share and revenue of $131.93 billion. These totals would mark changes of +8.26% and +19.84%, respectively, from last year.

It is also important to note the 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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.

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. Within the past 30 days, our consensus EPS projection has moved 0.4% lower. GOOGL currently has a Zacks Rank of #3 (Hold).

Digging into valuation, GOOGL currently has a Forward P/E ratio of 26.5. For comparison, its industry has an average Forward P/E of 33.93, which means GOOGL is trading at a discount to the group.

Also, we should mention that GOOGL has a PEG ratio of 1.48. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Internet - Services industry currently had an average PEG ratio of 3.56 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 159, putting it in the bottom 38% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.

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