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Alphabet Inc. (GOOG) Gains As Market Dips: What You Should Know

Zacks Equity Research
·2-min read

Alphabet Inc. (GOOG) closed at $1,917.24 in the latest trading session, marking a +0.94% move from the prior day. This move outpaced the S&P 500's daily loss of 0.15%. Elsewhere, the Dow lost 0.07%, while the tech-heavy Nasdaq lost 0.07%.

Investors will be hoping for strength from GOOG as it approaches its next earnings release, which is expected to be February 2, 2021. The company is expected to report EPS of $15.90, up 3.58% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $44.09 billion, up 17.34% from the year-ago period.

Investors should also note any recent changes to analyst estimates for GOOG. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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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 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.53% higher within the past month. GOOG is currently sporting a Zacks Rank of #2 (Buy).

Digging into valuation, GOOG currently has a Forward P/E ratio of 30.35. Its industry sports an average Forward P/E of 33.86, so we one might conclude that GOOG is trading at a discount comparatively.

Investors should also note that GOOG has a PEG ratio of 1.79 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Internet - Services industry currently had an average PEG ratio of 1.79 as of yesterday's close.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 111, putting it in the top 44% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring 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.

To follow GOOG in the coming trading sessions, be sure to utilize Zacks.com.


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