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

Zacks Equity Research

In the latest trading session, Alphabet (GOOGL) closed at $1,206.32, marking a -0.48% move from the previous day. This change lagged the S&P 500's 0.09% gain on the day. Meanwhile, the Dow gained 0.26%, and the Nasdaq, a tech-heavy index, lost 0.17%.

Heading into today, shares of the internet search leader had gained 0.5% over the past month, lagging the Computer and Technology sector's gain of 5.65% and the S&P 500's gain of 4.92% in that time.

Investors will be hoping for strength from GOOGL as it approaches its next earnings release. The company is expected to report EPS of $12.55, down 3.91% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $32.79 billion, up 20.73% from the year-ago period.

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.

Any recent changes to analyst estimates for GOOGL should also be noted by investors. 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. 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).

Digging into valuation, GOOGL currently has a Forward P/E ratio of 24.43. Its industry sports an average Forward P/E of 26.51, so we one might conclude that GOOGL is trading at a discount comparatively.

Also, we should mention that GOOGL has a PEG ratio of 1.4. 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. GOOGL's industry had an average PEG ratio of 2.58 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 176, which puts it in the bottom 32% 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.

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


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