Google (GOOG) at 20 times earnings is so-not-worth it. Did you know this company just missed proft estimates by a-dollar-twenty-two? Profit growth was negative — negative — for the quarter. Meanwhile sales jumped a whopping 47%. The boost in sales is from Google growth and also the addition of the Motolora purchase that has just been gobbling profits.
I just don’t see how GOOG keeps momentum going, the stock shouldn’t be going higher. But we are in a full-force Bull Market and growth stocks are going up.
One Year Chart
During the last four quarters, profits have increased 13%. I’m sorry, that’s the total of all four quarters added together. Forgot to divide by 4. Ok, here we go: 3%. Profits have increased an average of threeee-percent the last four quarters. Ugh. Estimates how more of the same coming.
The company to grow profits only 9% this year, and the stock’s got a P/E of 20? What? A few years ago I felt GOOG was worth 20 times earnings (profits were growing much faster/P/E was in the teens) and now its gotten that high P/E of 20 while showing an Earnings Table in red? Not fair. This stock is so not worth it.
Fair Value
I think this stock is worth 15 times earnings. Its seems like they are just pissing away money. Thinking long term. But really, the profit engine for Google has always been search, and even though the company plows billions into R&D, it really can’t find another profit generator that’s made a difference. In my eyes anyway.
Sharek’s Take
This stock isn’t worth $900 a share, but it’s selling for that. And GOOG can continue to go up because the stock seems to be thought of highly in the stock market. Although I like the company — and want to get back into the stock — Google is so not worth it right now.
View the Earnings Table here.View the Ten Year Chart here.
