Alphabet, Inc. ($GOOG) Earnings (Q3 FY22)

 Alphabet, Inc. ($GOOG) Earnings and Opinion:


Alphabet (Google) is a company in the Communication Services sector and operates in the Internet Content & Information industry. The company provides various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America. Google was founded in 1998 and is currently headquartered in Mountain View, California. The company made its debut on the stock market in 2004.

Google Financial Results:

  • Revenue of $69.1B missing expectations of $70.76B
  • Operating Income of $17.14B missing expectations of $19.71B
  • Operating Margin of 24.8% missing expectations of 27.88%
  • Diluted EPS of $1.02 missing expectations of $1.25
Opinion:
Google is currently down about 7% in the after hours. The company reported earnings after the market closed this afternoon. This was a disappointing earnings release, with some numbers missing expectations by a decent margin. The company said that inflation is making growth in digital advertising slowdown and competitors are all battling for smaller budgets. Google is the market leader in digital advertising, so we should see a fall in these companies in the near-term. The YouTube business missed sales by a wide margin as competitors like TikTok are taking the flame. Google has claimed to be taking efforts to control their costs, but it will be a matter of time when we will see these transpose into the actual earnings report. Google cloud looks to be holding solid with revenues, but the Google Services are not looking hot on both the revenue and income side. Looking into valuation, Google seems to be right around fair value. The P/E ratio is at 20.45, which is lower than the median. However, the P/S comes in a little high at 4.87. EV/EBIT Adj is at 15.09, which is lower than median of 19.50. In my opinion, you would look a little foolish to not pick up Google right now. It is so much more attractive at a low stock price, and it hasn't performed the best this year. This is causing valuation to be right near fair value, and a perfect time for you to pick it up. It's more of a long-term play with this one. Google is facing a lot of fierce competition right now, with TikTok and other apps coming into steal some market share. I know Google is working on plans to improve their services to try and regain the market share and knock out the competition. The cloud business remains solid, and I think it will continue to grow as they invest more and more into it. This is definitely a company to create foundation in your portfolio, and I am expecting more growth from them in the years to come. 


*information from Bloomberg and Yahoo Finance 

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