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

Zacks Equity Research

Alphabet (GOOGL) closed at $1,440.03 in the latest trading session, marking a +0.77% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.7%. At the same time, the Dow added 0.29%, and the tech-heavy Nasdaq gained 1.04%.

Prior to today's trading, shares of the internet search leader had gained 5.97% over the past month. This has lagged the Computer and Technology sector's gain of 7.4% and outpaced the S&P 500's gain of 4.38% in that time.

GOOGL will be looking to display strength as it nears its next earnings release, which is expected to be February 3, 2020. On that day, GOOGL is projected to report earnings of $12.77 per share, which would represent no growth from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $38.44 billion, up 20.73% from the prior-year quarter.

Investors might also notice recent changes to analyst estimates for GOOGL. These revisions help to show the ever-changing nature of near-term business trends. 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 remained stagnant within the past month. GOOGL is currently a Zacks Rank #2 (Buy).

Looking at its valuation, GOOGL is holding a Forward P/E ratio of 26.1. This valuation marks a discount compared to its industry's average Forward P/E of 28.12.

Investors should also note that GOOGL has a PEG ratio of 1.56 right now. 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 was holding an average PEG ratio of 2.56 at yesterday's closing price.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 160, 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.

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


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