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Alphabet Inc (GOOGL) Trade Card™

Alphabet Inc (GOOGL)
1102.08 -59.87 (-5.15%)
Sector: Information Technology
Published by Capital Market Laboratories on 2020-04-02

What does this rating mean?
STOCK RETURNS
3Mo: -17.7%   |   6Mo: -8.6%  |   12Mo: -8.1%

TECHNICAL RATING
10DMA: $1,192.0  |  50DMA: $1,340.2  |  200DMA: $1,266.9
What does this rating mean?

Fundamentals     

➜ GOOGL generates $1.2765 in revenue for every $1 in expense, which is high and well above the sector average of $0.99.

In a move that was nothing short of stunning, on September 15th, 2015 Apple released iOS9 and it appears to be a violent attack on the entire mobile advertising world and especially an attack on Google, including Google Search. You can read that story from CMLviz here: Apple Just Stunned the World and Attacked Google.

A narrative had been forming for several years that Google as a core equity holding was dead -- a narrative which in many ways was ridiculous and totally disproved in the latest earnings release. The stock actually realized the largest single day gain in market cap value ever in the United States equity market. Google's revenue, earnings and cash from operations are at all-time highs while R&D and SG&A are near all-time highs.

In 2006, Apple and Google were spending about the same amount on R&D. By 2008, Google was spending about $1 billion more annually than Apple. As of today, Google spends about $4 billion more in R&D than Apple. GOOGL spends more on R&D than almost every company in all of North America in any sector.



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Google now has six services with over a billion users: YouTube, Android, Search, Maps, Chrome, and Google Play.

In the earnings report on 7-16-2015, Google disclosed that watch time for YouTube rose 60% in the second quarter and the video service had more viewers aged 18-49 on mobile alone than any U.S. cable network. The on-line video ad space is a growing one, and both Google and Facebook are trying to entice advertisers into the space. Google is the biggest and best advertiser in the world, by a lot.

Google got into the operating system fray very late with two mega players (MSFT and AAPL) already in there, but Andoid now boasts 80% of the mobile market. Oddly, that incredible narrative is rarely discussed. However, Google has lost some of its control over the market, as many new players have created their own flavors of Android which are totally out of the hands (control) of Google. That brings a new vulnerability which MSFT is taking advantage of in a very clever and flexible way. But Google is finally focusing on increasing margins, which means cost controls and the firm brought in a true outsider with new CFO Ruth Porat (the former CFO of Morgan Stanley). Early signs show that choice was a very shrewd one.

While advertising takes the cake in terms of the dominant force at over 80% of revenue, other initiatives are developing including Google Photos, which is the photo portion of Google Plus. While Google Plus is being dismantled, Google may have accidentally stumbled across a nice competitive product for Facebook's (FB) Instagram. Keep an eye on that.

Further, the company is moving into Android Wear, Android Pay, Android Auto (a self-driving car), Virtual Reality (to compete with Facebook's (FB) Oculus one presumes), a new Tablet called Project Tango amongst other things (yes, there is more). Of course, first and foremost, it's ads, click rates and click rate growth.

Technicals   |   Support: 1073   |   Resistance: 1314.76   

Swing Death Cross Alert: The short-term 10 day MA is now below the 50 day MA.

GOOGL's -5.15% drop today has a material impact on its technical outlook.

GOOGL has a one bull (lowest rated) technical rating because it's trading below the 10-day (short-term), 50-day (medium-term) and 200-day (long-term) moving averages.


Earnings Estimates
Earnings Date
2018-01-25
EPS
$10.13
Revenue (Mean)
$
Revenue (Median)
$
Last Quarter (Actual)
$46.08 billion


Fundamentals Rating Summary


Metric Current 1yr Ago 2yr Ago Direction
Revenue (TTM US$ Millions)Trending Higher 161,857 136,819 110,855 Trending Higher

Operating Margin (QTR)Falling 1.28 1.29 1.16 Falling

Net Income (TTM US$ Millions)Rising 34,343 30,736 12,662 Rising

Cash from Operations (TTM US$ Millions)Trending Higher 54,520 47,971 37,091 Trending Higher


Research and Development Expense/RevenueRising 0.157 0.154 0.133 Rising




Stock Returns and Chart


GOOGL is down -17.7% over the last three months and down -8.6% over the last six months. The stock has returned -8.1% over the last year.

Before we dig into the fundamental trends that drive the rating, let's look at a two-year stock chart with regression channel and 10-day momentum (on the bottom).

Note: You can change time horizons by clicking the or buttons near the bottom of the chart. You can examine a one minute day trading chart by clicking the at the top left corner of the chart.

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Now let's examine the visualizations of the critical financial measures.


Enter Symbol


METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Revenue (TTM US$ Millions) 161,857136,819110,855Trending Higher

Revenue (TTM) is trending higher meaning that it has increased for at least five consecutive quarters (we can see the trend in the chart below the analysis).

Revenue over the trailing twelve months (TTM) for GOOGL is rising. For the most recent (annual) period the company reported $161.86 billion from $136.82 billion a year ago, or a 18.3% change. The two-year change in revenue (TTM) is $51.00 billion (a 46.0% change).

What do all these numbers mean?
GOOGL's fundamental rating benefited these results:
1. The one-year change was positive (but no extra points were given for a large percentage increase).
2. The two-year change was positive.
Finally, the up trend (consecutive quarters) in revenue benefited the fundamental (star) rating.

Let's look at Revenue (TTM US$ Millions) in the chart below.


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Enter Symbol



METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Operating Revenues/Operating Expense 1.281.291.16Falling

Operating Revenues/Operating Expense
Operating revenue over operating expense simply shows us how much revenue (in dollars) is generated for every dollar of expense. The ratio must be (at a minimum) above 1.0 in order for a company to turn an operating profit. For the latest quarter GOOGL showed a ratio of 1.28.

What do all these numbers mean?
A year ago Operating Revenues/Operating Expense was 1.29. In the last year we can see operating margins are decreasing but are greater than 1.0 for the most recent period.

GOOGL's fundamental rating was affected from the operating margin numbers in two ways:
1. The current value is above 1.0 (the firm generates an operating profit).
2. The one-year change was negative (lowers the rating a little bit).

Let's look at Operating Revenues/Operating Expense in the chart below with the total assets in the orange line.


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METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Net Income (TTM US$ Millions) 34,34330,73612,662Rising

Net Income (after tax profit) over the trailing twelve months (TTM) for GOOGL is rising. For the most recent trailing-twelve-months (TTM) the company reported net income of $34,343 (million). That's an increase in the most recent year from $30,736 (million) or a 11.74% change.

In our next chart we plot Net Income (TTM US$ Millions) in the blue bars and the quarterly results in the gold line. Note the rising bars from a year ago (four quarters ago).


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METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Cash from Operations (TTM US$ Millions) 54,52047,97137,091Trending Higher

Cash from Operations (TTM US$ Millions) is a critical determinant of stock price since market cap is the present value of all future free cash flows. For GOOGL the metric is falling (it was $47,971 million last year). For the most recent trailing-twelve-months the company reported Cash from Operations (TTM US$ Millions) of $54,520 million. That's an increase in the most recent year from $47,971 million or a 13.65% rise.

This cash metric is up $17,429 million from $37,091 million two-years ago.

Cash from Operations (TTM US$ Millions) is trending higher meaning that it has increased for at least five consecutive quarters (the annual number). This is an unusual occurrence and has a positive impact on the fundamental rating for GOOGL

For our next chart we plot Cash from Operations (TTM US$ Millions) in the blue bars through time. Note the falling bars from a year ago (four quarters ago).



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