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

Zacks Equity Research

In the latest trading session, Alphabet (GOOGL) closed at $1,232.65, marking a +0.23% move from the previous day. This move outpaced the S&P 500's daily gain of 0.03%. Meanwhile, the Dow gained 0.13%, and the Nasdaq, a tech-heavy index, lost 0.11%.

Prior to today's trading, shares of the internet search leader had gained 3.92% over the past month. This has lagged the Computer and Technology sector's gain of 4.15% and the S&P 500's gain of 4.17% in that time.

Investors will be hoping for strength from GOOGL as it approaches its next earnings release. In that report, analysts expect GOOGL to post earnings of $12.55 per share. This would mark a year-over-year decline of 3.91%. Meanwhile, our latest consensus estimate is calling for revenue of $32.79 billion, up 20.73% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $49.61 per share and revenue of $132.41 billion. These totals would mark changes of +13.52% and +20.27%, 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.

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.

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 0.42% higher within the past month. GOOGL is currently sporting a Zacks Rank of #2 (Buy).

Investors should also note GOOGL's current valuation metrics, including its Forward P/E ratio of 24.79. This valuation marks a discount compared to its industry's average Forward P/E of 26.21.

Meanwhile, GOOGL's PEG ratio is currently 1.42. 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. Internet - Services stocks are, on average, holding a PEG ratio of 2.64 based on yesterday's closing prices.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 174, which puts it in the bottom 33% 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.

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


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