Alphabet Inc. (GOOG) has recently been one of the most searched stocks on Zacks.com. Therefore, you may want to examine some of the facts that may shape stock performance in the short term.
The company’s stock has returned +6.4% over the past month, versus a +2.3% change in the Zachs S&P 500 Composite. The Zacks Internet – Services industry, to which Alphabet Inc. belongs, rose 5.7% over the period. The key question here is where is the stock likely to go in the near future?
Media releases and rumors about significant changes in a company’s business prospects typically “trend” its stock, leading to immediate price movements, but ultimately several factors that govern buying and holding decisions. There are always basic facts.
Earnings forecast revision
At Zacks, we prioritize assessing changes in a company’s revenue projections rather than focusing on other things. This is because we believe the fair value of a stock is determined by the present value of future earnings streams.
Our analysis is essentially based on how sell-side analysts covering equities revise their earnings forecasts in light of the latest business developments. As a company’s earnings projections go up, so does its stock’s fair value. Also, if the fair value of a stock is higher than the current market price, investors will tend to buy the stock, resulting in an increase in its price. For this reason, empirical studies have shown that there is a strong correlation between earnings forecast revision trends and short-term stock price movements.
Alphabet Inc. is expected to post earnings of $1.20 per share this quarter, representing a -21.6% change from the same period last year. Zacks Consensus Estimate has changed by +0.3% over the last 30 days.
The consensus expected profit for the current fiscal year is $4.68, representing a -16.6% change year-over-year. This estimate has changed by -0.6% over the past 30 days.
The consensus earnings forecast for the next fiscal year is $5.04, representing a +7.8% change from the forecast Alphabet Inc. reported a year ago. Estimates have changed by -0.6% over the past month.
With a strong track record of external audits, our proprietary stock valuation tool, Zacks Rank, effectively harnesses the power of earnings forecast revisions to provide a clearer picture of near-term stock price direction. Alphabet Inc. is rated Zacks Rank #3 (Hold) due to the magnitude of the recent change in consensus forecasts and three other factors related to earnings forecasts.
The chart below shows the evolution of the company’s 12-month consensus EPS forecast.
12 months EPS
Expected revenue growth rate
Earnings growth is arguably the best indicator of a company’s financial health, but if you can’t make money, nothing happens. It is almost impossible for a company to grow profitably without making a profit for a long period of time. Therefore, knowing the potential revenue growth rate of a company is very important.
Alphabet Inc.’s consensus revenue estimate for the quarter is $63.22 billion, representing a +2.1% year-over-year change. For the current and next fiscal years, the $234 billion and $249.95 billion estimates represent +10.3% and +6.8% changes, respectively.
Last Reported Results and Surprise History
Alphabet Inc. reported revenue of $57.27 billion in its last reported quarter. This is a change of +6.8% year-on-year. EPS for the same period was $1.06, and a year ago he was $1.40.
Compared to the Zacks Consensus estimate of $58.36 billion, the reported revenue represents a surprise of -1.87%. EPS surprise was -15.2%.
In the last four quarters, we’ve beaten EPS estimates only once. The company has beaten consensus earnings estimates only once in this period.
You can’t make efficient investment decisions without considering stock valuations. Whether the current price of a stock correctly reflects the intrinsic value of the underlying business and the company’s growth prospects is a key determinant of future price performance.
The current value of a company’s valuation multiples, such as price-to-earnings ratio (P/E), price-to-sales (P/S), price-to-cash-flow (P/CF), Helps to see if it’s fair valued, overvalued or undervalued, but how well its stock price compares to its peers on these parameters is well understood.
The Zacks Value Style Score (part of the Zacks Style Scoring System) pays close attention to both traditional and unconventional metrics, rating stocks from A to F (An is better than B). , B is better than C, B is better than C, etc.), identifying whether a stock is overvalued, overvalued, or temporarily undervalued. very helpful to do.
Alphabet Inc. is rated B on this metric, indicating that it trades at a discount to its peers. Click here to see the values of some of the metrics that contributed to this grade.
The facts discussed here and a lot of other information about Zacks.com may help you decide whether the market buzz about Alphabet Inc is worth paying attention to. Near future.
Sachs Names ‘Best Single-to-Double Pick’
Out of thousands of stocks, each of our five Zacks experts picked their favorites to surge +100% or more in the coming months. Out of these five, research director Heraz Mian chose her one with the most explosive advantages.
A little-known chemical company, up 65% from last year, but still cheap. With relentless demand, his skyrocketing earnings forecast for 2022, and a $1.5 billion stock buyback, retail investors are ready to jump in.
The company rivals other recent Zacks stock doublings as Boston Beer Company surges +143.0% in just over nine months and NVIDIA surges +175.9% in a year. or may exceed it.
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The views and opinions expressed herein are those of the authors and do not necessarily reflect those of Nasdaq, Inc.