Thinking of Investing in GOOGL? What Our Analysts Know.

Alphabet logged a 1.9% change during today's evening session, and is now trading at a price of $179.63 per share.

Alphabet returned gains of 51.8% last year, with its stock price reaching a high of $180.85 and a low of $115.35. Over the same period, the stock outperformed the S&P 500 index by 25.6%. More recently, the company's 50-day average price was $169.39. Alphabet Inc. offers various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America. Based in Mountain View, CA, the Large-Cap Technology company has 180,895 full time employees. Alphabet has not offered a dividend during the last year.

Strong Revenue Growth and Healthy Leverage Levels:

2018 2019 2020 2021 2022 2023
Revenue (M) $136,819 $161,857 $182,527 $257,637 $282,836 $307,394
Operating Margins 20% 21% 23% 31% 26% 27%
Net Margins 22% 21% 22% 30% 21% 24%
Net Income (M) $30,736 $34,343 $40,269 $76,033 $59,972 $73,795
Net Interest Expense (M) $114 $100 $135 $346 $357 $308
Depreciation & Amort. (M) $871 $925 $792 $10,273 $13,475 $9,311
Diluted Shares (M) 13,906 13,904 13,746 13,483 13,219 12,807
Earnings Per Share $2.21 $2.47 $2.93 $5.64 $4.54 $5.76
EPS Growth n/a 11.76% 18.62% 92.49% -19.5% 26.87%
Avg. Price $55.66 $59.42 $74.07 $125.53 $126.61 $179.63
P/E Ratio 25.19 24.06 25.28 22.26 27.89 31.19
Free Cash Flow (M) $22,832 $30,972 $42,843 $67,012 $60,010 $69,495
CAPEX (M) $25,139 $23,548 $22,281 $24,640 $31,485 $32,251
EV / EBITDA 26.86 23.1 23.93 18.95 18.87 24.46
Total Debt (M) $5,341 $4,554 $13,932 $14,817 $14,701 $13,253
Net Debt / EBITDA -0.4 -0.4 -0.3 -0.07 -0.08 -0.12
Current Ratio 3.92 3.37 3.07 2.93 2.38 2.1

Alphabet has rapidly growing revenues and increasing reinvestment in the business, strong operating margins with a positive growth rate, and generally positive cash flows. The company also benefits from an excellent current ratio of 2.1, a strong EPS growth trend, and healthy leverage levels.

an Increase in Expected Earnings Improves Its Value Outlook but Trading Above Its Fair Price:

Alphabet has a trailing twelve month P/E ratio of 26.0, compared to an average of 32.54 for the Technology sector. Based on its EPS guidance of $8.6, the company has a forward P/E ratio of 19.7. According to the 21.4% compound average growth rate of Alphabet's historical and projected earnings per share, the company's PEG ratio is 1.21. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 14.2%. On this basis, the company's PEG ratio is 1.83. This suggests that these shares are overvalued. Furthermore, Alphabet is likely overvalued compared to the book value of its equity, since its P/B ratio of 7.59 is higher than the sector average of 4.25. The company's shares are currently trading 235.4% below their Graham number. Ultimately, Alphabet's strong cash flows, decent earnings multiple, and healthy debt levels factor towards it being fairly valued, its elevated P/B ratio notwithstanding.

Analysts Give Alphabet an Average Rating of Buy:

The 44 analysts following Alphabet have set target prices ranging from $143.0 to $225.0 per share, for an average of $194.26 with a buy rating. The company is trading -7.5% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Alphabet has a very low short interest because 0.9% of the company's shares are sold short. Institutions own 80.9% of the company's shares, and the insider ownership rate stands at 0.25%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 8% stake in the company is worth $89,433,167,251.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.