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Google Doesn’t Care What You Think

Google (GOOG) came out with earnings last week and it doesn’t care what you think.

One-Year Chart

The company grew revenues nicely (up 29%) but profit growth was only 20%. In the quarter before profit growth was 29%. Seems like 29% should have been the lucky number last quarter too — but company management spent a ton of money on new hires.

Larry Page is the new CEO. In the analyst conference call after earnings, Page answered a few questions then bolted. Sa, sa, sa, see ya! Analysts didn’t get to ask questions.

So basically Google management doesn’t care what analysts think. Its a shame because these analysts tell the small investors what the company is doing. Its basically like Google doesn’t care if you invest in the company or not.

Earnings Table

To be honest with you, I almost went on a tirade two quarters ago after GOOG reported, but held back. I was sick of the company not telling me what they were going to make. Google management doesn’t give estimates on its business, so you can’t do modeling — of trust that it will come through with earnings as expected.

Then i got to thinking, you know what it is their company. If we don’t want to buy the stock we don’t have to. Google is what it is.

Also, GOOG only missed my estimate by a penny last quarter, not a big deal. Expecting $8.09 and getting $8.08 is nothing to worry about. If the company can grow 20% a year for a little while then the extra spending is worth it.

The Earnings Table shows profit growth could slow to 10% a quarter. I don’t know if that will happen, it seems GOOG could continue to grow at 20%.

Also, it looks like this company could earn $50 a share in 2014. That’s a big number. I wish investors could get a piece of that, in the form of a dividend.

Fair Value

I have to take GOOG’s Fair Value  P/E from 22 to 15. If management doesn’t care what analysts think, or give forward-looking guidance, then the stock’s gonna get a lower P/E. We’re not playing games. We are investing other people’s money and that’s more valuable than our own. We don’t like uncertainty.

With that being said (and calculated in) GOOG stock may not go much of anywhere for the next year.

Bottom Line

The bottom line is Google stock is selling around where it should be. Until management gives analysts guidance or issues a dividend this stock is going to grow at the rate earnings do. Google doesn’t care what you think. Deal with it.

Also see:

Give Google a Break

Google’s New CEO Gave Wall Street the Finger

Analysis: Google’s Page and Wall Street: Who Needs Who?

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