By: Craig Bowles
Alphabet, Inc. (GOOGL) is scheduled to report 2Q2018 earnings after the close of trading on Monday, July 23rd. Results are usually available minutes after the closing bell with a conference call webcast at Alphabet Investor Relations slated to begin at 4:30 p.m. ET. The S&P E-Mini, NASDAQ 100 E-Mini futures contracts and PowerShares QQQ (QQQ) tend to see active trading off the results. The company has implemented segment reporting, where Google financials are provided separately.
Outliers & Strategy
- Earnings Per Share (EPS): (If an EPS ex-items is available, that measure will be the comparable value.) The Street estimate is $9.61 (range $8.71 to $11.12) (Source: Yahoo! Finance). Consensus was $9.93 three months ago.
- Revenue Ex-Traffic Acquisition Costs: The Street consensus is $25.65 bln. (Source: Zack’s.com)
- Paid Clicks Q/Q Change: Q1 was 11%.
- Cost per Click Q/Q Change: Q1 was -9%.
- Alphabet’s Price/Earnings of 51.4 compares to a 5-year average of 30.4, Price/Book of 5.2 compares to a 5-year average of 4.1, Price/Sales of 7.3 compares to a 5yr average 6.3, and Price/Cash Flow of 21.8 compares to a 5-year average of 18.2.
- Analysts view Alphabet with 33 Buy, 4 Hold, and 0 Sell ratings. (source: MarketBeat.com)
- GOOG insiders sold 318,763 shares over the last three months and a net 528,966 shares in the past year. (source: NASDAQ.com) In February 2018, the company said they will buy back $8,589,869,056 worth of stock. The previous buybacks were $7 billion in October 2016 and $5 billion in 2015. Before that, it was 2010.
- Alphabet shares have a 1-day average price change on earnings of 3.24%. Options are pricing in an implied move of 2.77% off earnings.
- 7/18: Google implies it may no longer give away Android for free following EU antitrust decision, according to a post on CNBC.com.
- 7/18: The European Union plans to hit Alphabet Inc.’s Google with a record antitrust fine of €4.34 billion ($5.06 billion) and will likely demand for changes to Google’s Android business, according to a post by WSJ.
- 7/17: Google has secured several of the UK’s largest recruitment services for a local version of its jobs-hunting tool, according to a post on BBC.
- 7/17: Google launches its first WeChat mini program as its China experiments continue, according to a post by Techcrunch.com.
- 7/02: Google has been working on a lineup of new products, including new Pixel phones, second-generation Pixel Buds, and a new smartwatch. Expect the Pixel Watch later this year, according to a post on Businessinsider.com.
- 6/29: Google courting developers for coming game-streaming service, according to arstechnica.com.
- 6/20: IGTV will be rolling out globally over the next few weeks on Alphabet’s Android and Apple’s (AAPL) iOS operating systems, according to Barron’s.com.
- 6/01: Google decided not to renew its contract with a Pentagon drone program once it expires, after extensive protests from employees, according to Bloomberg.com.
- 5/09: The U.S. Transportation Department’s 10 winning drone pilot projects includes Alphabet among the winners, according to a post on Reuters.com.
The European Union plans to hit Alphabet Inc.’s Google with a record antitrust $5 billion fine that the company will appeal. Google decided not to renew its contract with a Pentagon drone program once it expires, after extensive protests from employees. Total TAC as a percentage of Google Advertising Revenues has been increasing recently, so might be of interest. Analysts remain bullish overall but less so over the past year probably due to valuations. A stock buyback was announced in February, but insider buying has since turned to selling the past three months. Over the past four quarters, the average beat/miss is 73c. Estimize consensus for a EPS of $9.79 on revenue ex-TAC of $25.892 bln compares to analyst consensus for a EPS of $9.61 on revenue ex-TAC of $25.65 bln.
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