Stock (Symbol) |
Alphabet (GOOGL) |
Stock Price |
$170 |
Sector |
| Technology |
Data is as of |
| November 5, 2024 |
Expected to Report |
| February 4 |
Company Description |
 Alphabet’s segments include Google Services, Google Cloud, and Other Bets.
The Google Services segment includes products and services such as ads, Android, Chrome, hardware, Google Maps, Google Play, Search, and YouTube. The Google Cloud segment includes Google’s infrastructure and platform services, collaboration tools, and other services for enterprise customers. The Other Bets segment includes earlier stage technologies that are further afield from its core Google business, and it includes the sale of health technology and Internet services. Its Google Cloud provides enterprise-ready cloud services, including Google Cloud Platform and Google Workspace. Google Cloud Platform enables developers to build, test, and deploy applications on its infrastructure. Google Workspace collaboration tools include applications, such as Gmail, Docs, Drive, Calendar, Meet, and various others. The Company also has various hardware products. Source: Refinitiv |
Sharek’s Take |
 Alphabet (GOOGL) delivered impressive growth last quarter, dropping 37% profit growth on 15% revenue growth. The highlight was its Google Cloud segment’s 35% revenue growth. The Google Other segment (Play Store, YouTube subscriptions, Pixel) grew sales 28%. There was a lot of good stuff in the Earnings Call. With Google Lense you can search what you see. Google Threat is cybersecurity. Waymo autonomous driving does over 150,000 paid rides a week. -Meanwhile, today the US Department of Justice (DOJ) tools Alphabet to sell its Google Chrome to reduce its monopoly in the search business. Shares are down 5% on the day to $166 on the news. My reaction is this is a long-term situation that needs to be worked out.
Founded in 1998, Alphabet’s mission is to organize the world’s information and make it universally accessible. The company’s main division, Google Search, performs more than a trillion searches per year. Alphabet’s brands include Google, YouTube, Android, Google Chrome, Google Maps, Gmail, Pixel, Google Cloud, and Waymo. Here’s Alphabet’s main divisions:
Alphabet is a conservative growth stock with a good growth rate. Prior to 2022, the company had profits up every year since its IPO outside of 2017 (which was only down as it switched its accounting practices to a more conservative stance). The stock has an Est. LTG of 22% a year, and a P/E of 19. I think the P/E should be 27. That implies 42% upside by the end of 2025. Management recently issued its first quarterly dividend, of $0.20 per share. Management also buys back stock. GOOGL is part of my Growth Portfolio, Conservative Growth Portfolio, and Aggressive Growth Portfolio. |
One Year Chart |
 This stock has been good for the past year. Nothing much to say about the stock chart.
With a P/E of 19, I think the stock is currently undervalued. My Fair Value is a P/E of 27. Note, since we are in the company’s Fiscal Q4 I’m calculating this P/E using 2025 profit estimates. The Estimated Long-Term Growth Rate is a solid 22%. This figure was 21% last quarter and increased for the fourth consecutive quarter. |
Earnings Table |
 Last qtr, Alphabet delivered 37% profit growth and beat expectations of 18%. Revenue increased 15% and beat estimates of 12%. Operating margin increased to 32% compared to 28% in year ago period.
Last qtr’s growth were driven by strong performance in Search (+12% sales growth, 546% of total revenue). Google Lens launched in October, and has been used for almost 20 billion searches.YouTube TV, NFL Sunday Ticket, and YouTube Music are drivine subscription revenue. Annual Profit Estimates jumped this qtr. Here’s profit estimates for the upcoming years: 2024 $8.00 Qtrly Profit Estimates for the next 4 qtrs are 29%, 7%, 15%, and 7%. Analysts think revenue will grow 12% next quarter. |
Fair Value |
 My Fair Value P/E is 27.
The stock is $170 this quarter amd has a P/E of 21 when we use 2024 revenue estimates. My Fair Value is a 27 P/E and when we use 2025 profit estimates that’s $241 a share. I believe this stock has 42% upside for 2025 and 62% for 2026. In 2017, GOOGL changed its accounting practices to more conservative accounting, and that’s why profits declined that year. |
Bottom Line |
 Alphabet (GOOGL) has been a steady grower this past decade, but 2020’s-2021’s move higher was a big one (116%) and the stock had to digest some gains. Now the stock is trending higher once again.
Alphabet had many things to get excited about during its Earnings Call. I’m bulish on this stock and think its cheap too. There’s good upside here, but having to sell Chrome would be a downer. I really like this stock for the Conservative Portfolio. It’s got a great combo of growth and safety. It moves up from 3rd to 1st in the Power Rankings. In the Growth Portfolio, the stock stays at 5th in the Power Rankings. GOOGLE stays at 10th in the Aggressive Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
5 of 31Aggressive Growth Portfolio 10 of 13Conservative Stock Portfolio 1 of 22 |
