What Are Analysts Saying About The Future Of Alphabet Inc’s (NASDAQ:GOOG)?
Based on Alphabet Inc’s (NASDAQ:GOOG) earnings update in December 2017, analyst consensus outlook appear vastly optimistic, with a bottom line expansion of more than 100% in the upcoming year, against the historical 5-year average growth rate of 11.42%. With net income at current levels of US$12.66B, we should see this rise to US$29.07B in 2019. Below is a brief commentary on the longer term outlook the market has for Alphabet. For those interested in more of an analysis of the company, you can research its fundamentals here. Check out our latest analysis for Alphabet
What can we expect from Alphabet in the longer term?
Longer term expectations from the 31 analysts covering GOOG’s stock is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of GOOG’s earnings growth over these next few years.
This results in an annual growth rate of 22.99% based on the most recent earnings level of US$12.66B to the final forecast of US$40.73B by 2021. EPS reaches $57.49 in the final year of forecast compared to the current $18.27 EPS today. Earnings growth appears to be a result of cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. With a current profit margin of 11.42%, this movement will result in a margin of 22.50% by 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Alphabet, I’ve put together three relevant aspects you should look at:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is Alphabet worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Alphabet is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Alphabet? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
