Sunday, December 22, 2024

Alphabet (GOOGL) Stock Sinks As Market Gains: Here’s Why

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Alphabet (GOOGL) closed the most recent trading day at $148.66, moving -0.03% from the previous trading session. This change lagged the S&P 500’s 0.45% gain on the day. Meanwhile, the Dow experienced a drop of 0.23%, and the technology-dominated Nasdaq saw an increase of 0.84%.

Shares of the internet search leader have depreciated by 8.37% over the course of the past month, underperforming the Computer and Technology sector’s loss of 0.98% and the S&P 500’s gain of 2.54%.

The investment community will be paying close attention to the earnings performance of Alphabet in its upcoming release. The company is forecasted to report an EPS of $1.83, showcasing a 18.06% upward movement from the corresponding quarter of the prior year. In the meantime, our current consensus estimate forecasts the revenue to be $72.77 billion, indicating a 13.61% growth compared to the corresponding quarter of the prior year.

For the full year, the Zacks Consensus Estimates project earnings of $7.64 per share and a revenue of $292.3 billion, demonstrating changes of +31.72% and +13.95%, respectively, from the preceding year.

Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Alphabet. These revisions typically reflect the latest short-term business trends, which can change frequently. Consequently, upward revisions in estimates express analysts’ positivity towards the company’s business operations and its ability to generate profits.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.

The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed a 0.22% increase. Alphabet presently features a Zacks Rank of #3 (Hold).

In terms of valuation, Alphabet is presently being traded at a Forward P/E ratio of 19.48. This indicates a discount in contrast to its industry’s Forward P/E of 29.46.

We can also see that GOOGL currently has a PEG ratio of 1.11. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company’s expected earnings growth trajectory. The Internet – Services industry currently had an average PEG ratio of 2.1 as of yesterday’s close.

The Internet – Services industry is part of the Computer and Technology sector. This industry, currently bearing a Zacks Industry Rank of 92, finds itself in the top 37% echelons of all 250+ industries.

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

Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.

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