I wish this was a post where I could give you an exact answer, but it’s not. Increasingly, I’m struggling to get a strong opinion about Google’s (GOOG, Financial) stock. I do know that I LOVE what they’re doing. They have incredible products that I use all the time and are working on moonshots (self-driving cars, balloons, top ISP, etc) that could transform our way of living. I have no doubt that Google will be a major tech company for decades longer. I also think that from that perspective, the return of Larry Page as CEO was the best thing that could have happened.
There is a big difference between a great company and a fast rising stock price though. In the end, for Google to be worth its current investment, the revenues and profits will need to increase significantly over the next few years. Let’s start off by looking at Google’s numbers:
So Google is trading at a forward P/E over 20. In the past 5 years, both sales and earnings per share have increased by around 20% annually which is solid. I’m not convinced that it will be able to keep it up though. If you think about it, Google’s money has been mostly generated by its search and display advertising businesses. Those have mostly seen growth because of increased traffic. With a dominating market share and most of the growth of the internet population behind us, I’d think that Google will need to generate growth from other divisions.
Already, you’d think that through products such as Maps, Gmail, Docs, Drive, Android, its venture investments and other kind of activities, Google would be able to generate significant cash. That is not the case though.
There is a big difference between a great company and a fast rising stock price though. In the end, for Google to be worth its current investment, the revenues and profits will need to increase significantly over the next few years. Let’s start off by looking at Google’s numbers:
Ticker | Name | Price | EPS | PE Ratio | PE Next Year | Return YTD | Sales Growth | Analyst rating | Book Value | Beta | Revenue/Share | Sales 5Y Avg Growth | EPS 5Y Avg Growth |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
GOOG | Google Inc | 1122.98 | 32.97 | 31.82 | 21.57 | 0.85 | 32.37 | 4.42 | 248.35 | 0.96 | 153.34 | 22.41 | 18.89 |
Already, you’d think that through products such as Maps, Gmail, Docs, Drive, Android, its venture investments and other kind of activities, Google would be able to generate significant cash. That is not the case though.