Alphabet Inc. (GOOG) Beats Market Returns: Some Facts to Consider

Alphabet Inc. (GOOG) closed the latest trading session at $188.19, indicating a change of +0.75% from the previous session. This change outpaced the S&P 500’s gain of 0.28% on the day. Meanwhile, the Dow Jones gained 0.53% and the tech-heavy Nasdaq gained 0.4%.

Shares of the company have gained 4.71% over the past month, outperforming the Computer and Technology sector’s gain of 4.22% and the S&P 500’s gain of 3.78%.

The investment community will be closely watching Alphabet Inc.’s performance in its upcoming earnings report. The company is expected to report EPS of $1.85, up 28.47% from the prior-year quarter. Meanwhile, the latest consensus estimate is calling for revenue of $70.55 billion, which would indicate an increase of 13.67% from the prior-year quarter.

For the full year, the Zacks Consensus Estimates are projecting earnings of $7.61 per share and revenue of $291.26 billion, showing changes of +31.21% and +13.55%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for Alphabet Inc. These recent adjustments often reflect changing dynamics in near-term business trends. Therefore, we can interpret positive estimate revisions as a good sign for the company’s business outlook.

Empirical research indicates that these estimate revisions have a direct correlation with upcoming stock price movements. To exploit this correlation, we have created the Zacks Rank, a quantitative model that incorporates these estimate changes and presents a viable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 ranked stocks generating an average annual return of +25% since 1988. Over the past 30 days, the Zacks Consensus EPS estimate has moved 0.05% higher. Alphabet Inc. currently sports a Zacks Rank of #3 (Hold).

In terms of valuation, Alphabet Inc. is currently trading at a forward P/E ratio of 24.55. This represents a premium to the industry average forward P/E ratio of 23.03.

Investors should also note that GOOG currently has a PEG ratio of 1.4. The PEG ratio is similar to the commonly used price-to-earnings ratio, but this metric also incorporates the company’s expected earnings growth rate. The average PEG ratio for the Internet Services industry was 1.95 as of yesterday’s market close.

The Internet Services industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 102, this sector ranks in the top 41% of all industries with more than 250 members.

The Zacks Industry Rank gauges the strength of our various industry groups by determining 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.

Be sure to use Zacks.com to track all of these stock metrics, and more, in the coming trading sessions.

Want to know the latest recommendations from Zacks Investment Research? You can download the top 7 stocks for the next 30 days today. Click to get this free report

Alphabet Inc. (GOOG): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research