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Alphabet (GOOG) Gains As Market Dips: What You Should Know

Zacks Equity Research
American Airlines (AAL) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

In the latest trading session, Alphabet (GOOG) closed at $1,198.85, marking a +1.23% move from the previous day. This move outpaced the S&P 500's daily loss of 0.01%. Elsewhere, the Dow lost 0.1%, while the tech-heavy Nasdaq added 0.12%.

Prior to today's trading, shares of the internet search leader had gained 6.34% over the past month. This has outpaced the Computer and Technology sector's gain of 4.57% and the S&P 500's gain of 2.24% in that time.

Investors will be hoping for strength from GOOG as it approaches its next earnings release. The company is expected to report EPS of $10.55, up 6.24% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $29.96 billion, up 20.51% from the prior-year quarter.

GOOG's full-year Zacks Consensus Estimates are calling for earnings of $47.38 per share and revenue of $131.76 billion. These results would represent year-over-year changes of +8.42% and +19.68%, respectively.

It is also important to note the recent changes to analyst estimates for GOOG. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. GOOG is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, GOOG is currently trading at a Forward P/E ratio of 24.99. For comparison, its industry has an average Forward P/E of 25.08, which means GOOG is trading at a discount to the group.

Investors should also note that GOOG has a PEG ratio of 1.43 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. GOOG's industry had an average PEG ratio of 2.86 as of yesterday's close.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 160, putting it in the bottom 38% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow GOOG in the coming trading sessions, be sure to utilize Zacks.com.


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