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

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Zacks Equity Research
·3 min read
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Alphabet (GOOGL) closed the most recent trading day at $1,884.15, moving +0.22% from the previous trading session. This change outpaced the S&P 500's 0.03% gain on the day. Elsewhere, the Dow lost 0.04%, while the tech-heavy Nasdaq added 0.55%.

Heading into today, shares of the internet search leader had gained 8.79% over the past month, outpacing the Computer and Technology sector's gain of 5.24% and the S&P 500's gain of 3.99% in that time.

Investors will be hoping for strength from GOOGL as it approaches its next earnings release, which is expected to be February 2, 2021. The company is expected to report EPS of $15.95, up 3.91% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $44.05 billion, up 17.22% from the year-ago period.

Investors might also notice recent changes to analyst estimates for GOOGL. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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, 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.51% higher. GOOGL is holding a Zacks Rank of #2 (Buy) right now.

Investors should also note GOOGL's current valuation metrics, including its Forward P/E ratio of 30.02. For comparison, its industry has an average Forward P/E of 32.58, which means GOOGL is trading at a discount to the group.

Investors should also note that GOOGL has a PEG ratio of 1.77 right now. 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. GOOGL's industry had an average PEG ratio of 1.78 as of yesterday's close.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 122, which puts it in the top 48% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

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


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