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What to Expect from Google Parent Alphabet's (GOOGL) Q1 2019 Earnings

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Google parent Alphabet Inc. GOOGL shares have jumped roughly 22% so far this year to outpace the S&P 500’s 16% climb. Now, with first-quarter results out from some of its FAANG peers, including Amazon AMZN, let’s see what investors should expect from Google’s first quarter 2019 financial results that are due out after the closing bell Monday.

Quick Overview

Google’s search engine is nearly ubiquitous today. The firm reportedly grabbed over 37% of total US digital ad spending in 2018, to blow by second-place Facebook’s FB roughly 21% and third-place Amazon’s 4.1%. Going forward, the firm’s ability to attract advertisers will likely grow as Netflix NFLX, Hulu, and soon enough Disney DIS, Apple AAPL, and other non-ad supported platforms proliferate.

Along with its web browser and search engine, Alphabet sells hardware such as its Pixel smartphones, Home smart speaker, and more. The firm also boasts a cloud computing business, an app store, and has bet on the future with divisions such as its self-driving car segment Waymo.

As we mentioned at the top, shares of GOOGL are up 22% in 2019 and 23% over the last 12 months. Jumping back over the last five years, investors will notice that shares of Google have roughly matched Apple’s climb, while crushing the S&P. GOOGL stock rests near its 52-week high heading into earnings at roughly $1,271 per share.

 

 

Q1 Outlook & Earnings Trends

With all that said, Alphabet’s Q1 revenue is projected to jump 20.6% from the year-ago period to reach $29.99 billion, based on our current Zacks Consensus Estimate. Investors should note that our revenue estimate excludes total traffic acquisition cost (TAC is the portion of revenues shared with Google’s partners and amounts paid to distribution partners and others who direct traffic to the Google website). In the fourth quarter of 2018, the firm’s non-TAC revenues came in at $31.84 billion, up 23.1% year over year.

More specifically, Google’s core advertising business is projected to jump approximately 18% from $26.64 billion in the year-ago period to reach $31.49 billion in Q1, based on our current NFM estimates. Last quarter, the company saw its advertising revenues pop 20%.

At the bottom end of the income statement, the company’s adjusted quarterly earnings are projected to climb 6.5% to reach $10.57 per share. Investors should note that this would represent a significant slowdown from Q4’s 31.6% bottom-line growth.

Furthermore, Alphabet’s earnings estimate revision picture has been mixed, but its overall Q1 consensus estimate has come down in the last 60 days. With that said, the company boasts an impressive history of quarterly earnings beats, which includes an 18% average surprise over the trailing four periods.

 

 

Bottom Line

Alphabet is currently a Zacks Rank #3 (Hold) based, in large part, on its recent earnings estimate revision activity. GOOGL does also rock an “A” grade for Growth and a “B” for Momentum in our Style Scores system. Yet, amid all of the major earnings, GOOGL, which trades less heavily than some of its big-name peers, might have to really impress investors to continue its 2019 climb immediately following its Q1 release.    

Alphabet is scheduled to report its Q1 fiscal 2019 financial results after the closing bell on Monday, April 29. So, make sure to come back to Zacks for our full analysis of Alphabet’s actual quarterly metrics.

Zacks' Top 10 Stocks for 2019

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