Alphabet Inc. (GOOG) shared Q4 results after the market closed Tuesday, and despite an impressive rebound, shares slid more than 5% Wednesday morning.
The parent company of Google managed to grow sales by 13% year over year to $86.3 billion, narrowly outperforming the FactSet consensus of $85.3 billion.
The search engine provider also beat the bottom line estimate with an earnings per share of $1.64 compared to the $1.59 expected. This was driven by a net income of $20.7 billion, which was a solid performance compared to the 2022 figure of just $13.6 billion ($1.05/share).
Much of this turnaround can be attributed to an 11% uptick in advertising sales. Alphabet posted $65.5 billion for the segment compared to the $59 billion this time last year. YouTube specifically was a driver of growth with a 16% growth, while the Google Cloud segment pulled its own weight as well – up 26%.
That being said, analysts were hoping for at least $65.8 billion – even a slight miss like this is enough to send negative ripples throughout the market. Analysts are fearful that this is indicative of worldwide uncertainty on the overall state of the economy, and interest rates specifically.
Still, CEO Sundar Pichai was satisfied with the performance in Q4, suggesting that the growth seen in YouTube and Cloud segments is related to AI investments and innovation. He also teased that the best is yet to come.
Looking ahead, Pichai said the company will lean harder into AI innovation as a means of improving operational efficiency. This comes after Alphabet cut over 1,000 jobs to end the fourth quarter.
While GOOG is down more than 5% today, it’s still up 4% to start 2024. In the past 3 months, it’s up nearly 14%. So, what does all this mean for investors? We’ve taken a look through the VectorVest stock analysis software and found 3 things you need to see right now.
GOOG Still Has Very Good Upside Potential, Excellent Safety, and Fair Timing
The VectorVest system eliminates guesswork and emotion from your investment strategy through a simple proprietary stock-rating system. You’re given all the insights you need to make clear, calculated decisions in 3 ratings: relative value (RV), relative safety (RS), and relative timing (RT).
Each sits on its own scale of 0.00-2.00 with 1.00 being the average, making interpretation quick and easy. Better yet, you’re given a clear buy, sell, or hold recommendation based on the overall VST rating for any given stock at any given time. Here’s what we’ve uncovered for GOOG:
- Very Good Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (based on a 3-year price projection) to AAA corporate bond rates and risk. This offers much better insight than a simple comparison of price to value alone. The RV rating of 1.37 is very good for GOOG. The stock is undervalued with a current value of $165.
- Excellent Safety: The RS rating speaks to a stock’s risk profile, and comes from an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. GOOG has an excellent RS rating of 1.46 right now.
- Fair Timing: Even though GOOG fell a bit today, it still has fair timing with an RT rating of 1.07. This is based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year.
The overall VST rating of 1.30 is very good for GOOG, but it’s still not enough to earn the stock a buy. It’s currently rated a HOLD. That being said, take a look yourself and derive your own conclusions on this opportunity with a free stock analysis today!
Want These Types of Insights at Your Fingertips so You Can Win More Trades?
Use VectorVest to analyze any stock free. VectorVest is the only stock analysis tool and portfolio management system that analyzes, ranks and graphs over 18,000 stocks each day for value, safety, and timing and gives a clear buy, sell or hold rating on every stock, every day.
VectorVest advocates buying safe, undervalued stocks, rising in price. GOOG fell 5% Wednesday despite what appeared to be an impressive turnaround in digital advertising revenue - it fell short of analyst expectations. Still, the stock has very good upside potential, excellent safety, and fair timing.
Before you invest, check VectorVest! Click here to ANALYZE ANY STOCK FREE and see our system in action!