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Alphabet Inc. (GOOGL) Hits Fresh High: Is There Still Room to Run?
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Shares of Alphabet (GOOGL - Free Report) have been strong performers lately, with the stock up 13.2% over the past month. The stock hit a new 52-week high of $178.77 in the previous session. Alphabet has gained 26.7% since the start of the year compared to the 16.9% move for the Zacks Computer and Technology sector and the 22.6% return for the Zacks Internet - Services industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on April 25, 2024, Alphabet reported EPS of $1.89 versus consensus estimate of $1.49 while it beat the consensus revenue estimate by 2.35%.
For the current fiscal year, Alphabet is expected to post earnings of $7.61 per share on $295.53 billion in revenues. This represents a 31.21% change in EPS on a 15.21% change in revenues. For the next fiscal year, the company is expected to earn $8.65 per share on $329.71 billion in revenues. This represents a year-over-year change of 13.68% and 11.57%, respectively.
Valuation Metrics
Alphabet may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Alphabet has a Value Score of D. The stock's Growth and Momentum Scores are B and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 23.3X current fiscal year EPS estimates, which is a premium to the peer industry average of 23.2X. On a trailing cash flow basis, the stock currently trades at 25.7X versus its peer group's average of 11.2X. Additionally, the stock has a PEG ratio of 1.35. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Alphabet currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Alphabet meets the list of requirements. Thus, it seems as though Alphabet shares could have a bit more room to run in the near term.
How Does GOOGL Stack Up to the Competition?
Shares of GOOGL have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Dropbox, Inc. (DBX - Free Report) . DBX has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of A, and a Momentum Score of C.
Earnings were strong last quarter. Dropbox, Inc. beat our consensus estimate by 18.37%, and for the current fiscal year, DBX is expected to post earnings of $2.05 per share on revenue of $2.54 billion.
Shares of Dropbox, Inc. have gained 2.5% over the past month, and currently trade at a forward P/E of 11.67X and a P/CF of 13.35X.
The Internet - Services industry is in the top 28% of all the industries we have in our universe, so it looks like there are some nice tailwinds for GOOGL and DBX, even beyond their own solid fundamental situation.
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Alphabet Inc. (GOOGL) Hits Fresh High: Is There Still Room to Run?
Shares of Alphabet (GOOGL - Free Report) have been strong performers lately, with the stock up 13.2% over the past month. The stock hit a new 52-week high of $178.77 in the previous session. Alphabet has gained 26.7% since the start of the year compared to the 16.9% move for the Zacks Computer and Technology sector and the 22.6% return for the Zacks Internet - Services industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on April 25, 2024, Alphabet reported EPS of $1.89 versus consensus estimate of $1.49 while it beat the consensus revenue estimate by 2.35%.
For the current fiscal year, Alphabet is expected to post earnings of $7.61 per share on $295.53 billion in revenues. This represents a 31.21% change in EPS on a 15.21% change in revenues. For the next fiscal year, the company is expected to earn $8.65 per share on $329.71 billion in revenues. This represents a year-over-year change of 13.68% and 11.57%, respectively.
Valuation Metrics
Alphabet may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Alphabet has a Value Score of D. The stock's Growth and Momentum Scores are B and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 23.3X current fiscal year EPS estimates, which is a premium to the peer industry average of 23.2X. On a trailing cash flow basis, the stock currently trades at 25.7X versus its peer group's average of 11.2X. Additionally, the stock has a PEG ratio of 1.35. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Alphabet currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Alphabet meets the list of requirements. Thus, it seems as though Alphabet shares could have a bit more room to run in the near term.
How Does GOOGL Stack Up to the Competition?
Shares of GOOGL have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Dropbox, Inc. (DBX - Free Report) . DBX has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of A, and a Momentum Score of C.
Earnings were strong last quarter. Dropbox, Inc. beat our consensus estimate by 18.37%, and for the current fiscal year, DBX is expected to post earnings of $2.05 per share on revenue of $2.54 billion.
Shares of Dropbox, Inc. have gained 2.5% over the past month, and currently trade at a forward P/E of 11.67X and a P/CF of 13.35X.
The Internet - Services industry is in the top 28% of all the industries we have in our universe, so it looks like there are some nice tailwinds for GOOGL and DBX, even beyond their own solid fundamental situation.